How to be Better with your Money in 2021

How to be Better with your Money in 2021

Usually when people think about personal finance, they just assume that it will be easy. Money is money, right? What can be so complicated about saving money and then investing it? You graduate from university/college, you get your first real job, you start making big-boy or big-girl money and then you have the opportunity to start spending that money on whatever you want! Most people will usually buy a house and/or a car in between starting to work and retiring. At some point before you retire, you are expected to have magically saved up enough money to be able retire comfortably without needing to work again. Of course, at this point you hope that the beautiful house and car that you purchased all those years ago are completely paid off and you are left without any debts. Well at least that is the dream but for most people, real life is just not that easy.

In reality, personal finance is confusing, and a source of worry for most people as it is tough to make enough money to be able to live and save at the same time. Once you start saving a little bit of money, a new money black hole appears and you are back to where you began, with no savings. Unless you are one of the lucky ones who had parents that helped them pay off their school debts so that they began their adult life with little to no debt or you were able to land that incredible high-paying first job that helped you begin to save money, you are stuck in the financial rat race with the rest of us. 

As we all fall in this category, I have taken the time to help us take small, but impactful steps to make 2021 the year where we learn how to properly save money and begin investing so that we are not stuck working for every penny that we make.

Where do we start?

Unlike those TV infomercials who promise you quick and easy weight-loss results by taking a magic pill every day, personal finance is a long process that has no shortcuts. The best way to start is to take the time to review where you have been. You need to pay attention every single day to what you are buying and spending your hard-earned cash on. This is done by taking that first step and opening your credit card statements, checking your bank accounts, adding up what you owe on one side and figuring out what you own on the other side (think savings account, chequing account, any money hidden underneath your mattress). You can also check to see if you have a RRSP (Registered Retirement Savings Plan) with work. We are trying to begin your new journey with an understanding of what has happened in the past and how we will avoid falling back into the same hole in the future. We want to start with a complete picture of your actual financial situation as it stands today. 

I have provided a simple picture if you are more of a visual learner in the table below. This is what I owe you are able to develop for your current situation so that you are aware of how much money is coming in and how much is being paid out.

What I Own

What I Owe

Chequing account:


Credit Card 1:


Savings account:


Credit Card 2:




Line of Credit:


Budgeting 101

Once you have figured out what you are working with and how much more you owe, we can begin figuring out where you are actually spending your money. For 30 days (one calendar month), I ask that you begin tracking all of your expenses (which is as easy as reviewing your debt and credit card statements if you tend not to use cash often) but also being able to take a look at what you are actually spending your money on. Are you spending a lot of money on eating out? This might just be because you do not have the time in the morning to organize a lunch. If this is the case, how can you resolve this? It might be worth it to make a bunch of lunches on Sunday afternoon when you have a bit more leisure time so that you can avoid paying for high-priced lunches during the week. By doing this, you can save $10 a day or $50 a week! I find that most people do not even realize how much money they are spending on simple expenses like auto insurance (which you should definitely be shopping around for once a year) or on bank fees that are charged if you have less than a minimum balance (yes, there are banks that do not have minimum balances and these are the banks you should be bringing your business too).

Once the 30 days have passed, you will definitely be more aware of where your money is going and I guarantee, like myself, you will be surprised! I personally did not realize how much money I was spending on eating out, as it had become a habit. Although I miss my Domino Pizza on Friday nights, I’m glad that the extra money I saved from stopping that expensive routine is now in my bank account! Now that you have a baseline and a better understanding of where your money is going every month, you can begin looking for areas where you can reduce the amount of money spent. Personally, as an example, I concentrated on areas like eating out (reduced my cost from $150 to $50 a month, which is a savings of $1200 a year!) and subscriptions (started using Spotify with ads rather than Spotify Premium and saved $120 a year), to start saving more money. 

Now, eating out and subscriptions are a bit easier to cut because they are not essentials. If you are mostly spending money on things, like expensive rent or a vehicle, that you cannot really cut completely, this is when you would get on the phone, I know I hate calling people too but this is the only way to negotiate and get a better deal! I find this works best for things like internet and your cell phone. With these, you would be surprised how much money you can save a month with just a quick call (quick meaning actually talking to someone for 5 minutes and being put on hold for an hour) and how these savings can add up quickly throughout the year. The easiest way to get a better price is to let them know you are going to go with a competitor who has a better price and I promise you that you will definitely get off the phone with a cheaper monthly plan! Remember: if you do not take the time to ask, you will never get a cheaper rate.

Extra cash – Compound interest

Once you have found a couple of places where you can save a bit of extra money in your budget, you better put it directly into your savings. DO NOT, I REPEAT DO NOT reward yourself by spending this “new” money. The whole point of this entire exercise is to put more money towards your future. With that being said, many people might get overwhelmed with the extra money that they were not expecting to have. But it’s not as hard as you think, in Canada, the best thing you can do with your extra money is to open up an account, either an RRSP or a TFSA account (see links if you want to learn more about this brokerage accounts), which can be easily done online where you can transfer a certain amount (hopefully 100% of that extra money you found in your budget) every month. By doing this, the more money you put into your account every month, the more time that this money has to grow and trust me, when you start seeing your money grow you will feel the excitement of putting even more money in to watch it skyrocket.

The whole idea of using money to make more money is compounding interest. Compounding interest is when you let an asset, money in this example, gather interest over time because the bank where the money is stored is paying you interest for keeping your money in their bank which allows it to increase. This increase comes from two reasons: 1.) You are not spending the money and 2.) The interest is allowing your money to increase exponentially over a couple of years.

50/30/20 Formula

If you ever wonder if you are saving enough, there is a simple rule to help keep you on the path to a wealthy future. The classic 50/30/20 formula is as follows: you can spend 50% of your take home pay on fixed expenses like your rent, 30% on “discretionary” expenses like eating out and the last 20% on increasing your savings. Please note that this is simply a general formula and you would need to determine yourself what percentages work best for you. I personally have increased my fixed expenses to 60% as I live in an expensive part of Canada and my rent is a bit more expensive than the average.

Save that Money

One method of saving money that I have had some readers mention to me is what I call the “best deal” saving method. Imagine you are looking to buy a new fridge and after searching online (due to COV-19), you find the perfect fridge for $1,500. Since you need a fridge and this one has everything you need, you are ready and willing to spend all $1,500 to get it. To your surprise, when you go to check out, the company gives you an extra 10% off because of some special Pandemic promotion. Now instead of paying $1,500 for this new fridge, you will only need to pay $1,350. Now you have an extra $150 to put in your savings account. So at the end of the day, you have still spend $1,500 on your budget but instead of having that all listed in your fixed costs, $150 of that money will be saved and later invested to help make you more money in the long-term. 

Treat Saving Money as an Expense

As a concluding point, I have found that the best way to look at saving money is to treat it like a monthly expense. No matter what happens during the month, it is always important to pay off all of your expenses and by treating the money that you should save every month as an expense, it creates an idea that this is a non-negotiable action rather than an optional extra that you can choose to do or not to do. Also, make sure that this savings account is far away from you and hard to access so that you are not tempted to take money out and use it unless it is an emergency.


Let me know what you think! Would you change anything? Let me know in the comments!

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  1. Great post by the great author, it is very massive and informative about Financial Independence but still preaches the way to sounds like that it has some beautiful thoughts described so I really appreciate this post .


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