Five financial mini-challenges to whoop your finances into shape

As some of you know, I have entertained an internship in finance for the last nine months at an incubator (also known as a co-working space, similar to WeWork). This past Monday was my last day, and I’m incredibly grateful for the lessons I’ve learned in my work with their accounting team.

My responsibilities included invoicing, credit card reconciliation, and digital expense archiving for the organization and their contributing members. While my work was geared towards examining and recording the monthly expenses of organizations with multiple employees, many of the lessons I learned can be applied on an individual scale to increase one’s financial literacy and saving potential.

As someone with a passion for personal finance, yet with no formal education on the subject, this was and continues to be very exciting. From fashion to finance to fucking, there’s just something about the letter “F” that keeps me inspired. Currently, I am in the process of saving ardently for property, and it has inspired me to employ mini-financial challenges in my day-to-day life. The following challenges can be applied by anyone with a keen interest in reducing their debt, increasing their credit score, and becoming Frugal-As-Fuck. None of the following strategies focus on how to increase your income. Rather, these challenges help you to make the most of your current income. Without further ado, here are five strategies to help you succeed in attainting your financial goals.

1. Go Card-less One Day a Week

This first strategy was actually a game I would play with myself while in Fashion school. On campus, it was very easy to join in on an impromptu Tim Hortons coffee run or lunch with peers. The problem is that these seemingly innocent social purchases can become routine, and while not large expenses, they accumulate quickly. Before you know it, your credit card bill is higher than you expected, yet you can’t seem to remember why. Coffee breaks are fun though- and who wants to feel left out? My suggestion is: choose one day a week where you keep your debit and credit cards at home, and carry a small amount of “emergency” cash (enough for a cab ride home if you’re feeling ill and can’t take public transportation home). What this does: you have a polite way of excusing yourself from social spending- you can’t spend what you don’t have, and I found that no one took it personally if I just wanted to come along for the stroll after hours of sewing. And by doing this once a week, it’s not as difficult as trying to go card-less for an entire week straight. As a weekly routine, you might surprise yourself with how much you can save by forgoing impromptu spending 52 days a year, particularly when you factor in the interest rate from credit cards, or overdraft fees with debit accounts. Put simply, it’s easier to not do something when you actually can’t.

2. Fiver

A tactic shared with me by a friend, fiver is easy, cumulative, and works well for anyone who’s income is completely or partially cashed-based. This is how it works: every time you break a larger bill, tuck your five dollar bills away, in a safe compartment in your wallet to be transferred to a safe or piggy bank at home. I suggest avoiding putting this into your checking account, where the fives will be absorbed and loose their tactile visibility, plus then they become spendable.

The harder part of this challenge: DO NOT TOUCH THESE FIVES. A way of staying motivated through this challenge is to set a goal that excites you. Some common examples include saving for a vacation, for a spa day, for that must-have tech item, or for establishing a gift budget for holidays so that you aren’t caught off guard when shopping for your loved ones. A close friend of mine has been using this strategy and found herself with close to $500 after a month and a half. This is also a great way to kick-start an emergency fund (1,000.00 is a commonly-recommended figure for this) for when life sucks.

3. Automatic Saving: hide your money from yourself

If you are paid by direct-deposit or via paycheque on a regular basis, this is the tool for you. Decide on a manageable amount to save once every pay day (for this example, assume you are being paid twice monthly). It can be more modest to start, like $20-$30/paycheque, and grow when you become more comfortable with having less fluid capital, or get a raise. Set up a recurring automatic transfer from your checking account for this amount, and schedule for the day after you are paid. I recommend transferring to a Tax Free Savings Account (TFSA), or for those who are ambitious, to a Registered Retirement Savings Plan (RRSP). Both are fairly simple to set up at your bank in person or over the phone. If you bank with an online institution, such as Tangerine, you can set one up from the comfort of the seat behind your computer. While you can easily transfer to and from a TFSA, it’s not so for an RRSP- there are penalties on withdrawing money early since withdrawals are taxable (the exception being for first time home-buyers who are applying their withdrawal to their real estate purchase).

If you like the feel of not being able to touch the automatic deposit, but are worried that you might have to and don’t want to use an RRSP, I suggest a savings account with an online-based bank. This is how I saved to pay off my student debt: I would make regular transfers from my TD checking account to my Tangerine savings account, online. Once the funds were transferred, I would not be able to touch them- since I did not have a card for my Tangerine account. Meaning that if I truly wanted to spend some of what I had saved, I would have to transfer the funds back from Tangerine to TD- a process that would take 2-3 business days to complete, before the funds become liquid once more. Having this delay, and lack of convenient access, meant that I would have to plan out large expenses and work harder to access my funds.

Truth be told, I’m a creature of convenience. More often than not, this approach stemmed pleasure spending, and helped me focus on the longer term goal of being debt free, which is ultimately much more satisfying. On the note of debt: this strategy works well for reducing debt and building your credit score, through the power of consistent regular payments. I suggest routing these automatic payments towards your debt with the highest interest rate, since you will save more in the long run this way. If you are someone who works only in cash, make sure to deposit your chosen amount the same way someone would deposit their paycheque, and stick to it.

4. Track it & Declutter

Have you ever asked yourself: “Holy Fuck- where did all my money go?” If so, you can fix this. Keeping track of your expenses, in a similar fashion to how businesses have to account for their spending, is a great way to gain accountability, and understand your spending habits. Most of the employees I worked with would have to submit monthly receipts and expenses reports that matched what they would claim in order to be reimbursed. This process is crucial since it mitigates non-approved expenses, and creates a public record accessible to their employers and peers, a system of accountability, if you will.

On a personal basis, this takes the guess work out of how you spend your discretionary and non-discretionary income, and can help you determine your necessary basic expenses, such as rent/mortgage payment, phone and internet bills, groceries and transportation. The old-school way of doing this is by writing out how much you spend on what as you do so- creating a personal ledger. This works two-fold, because it takes time, and requires effort- meaning that if you are also a creature of convenience, you’ll be inclined to spend less often so that you don’t have as much to record.

If writing isn’t your thing, many banks have free apps you can download and link to your accounts that will do this automatically, and categorize your expenses for you. I use the TD MySpend app, which is user friendly, explains my expenses through the use of colourful and understandable graphics, and it will alert me with notices. Throughout the month, the app will ping every time I make a purchase, and the subject line will include a notice of weather my spending is below, average, or above average based on previous months’ data.

I suggest the use of such apps because the results might surprise you. For instance, I live downtown and opt not to have a metro pass, walking most places or taking the odd über. However, there have been at least a couple months where my the cost of my über trips exceeded what I would be spending on transportation otherwise- yikes! On top of taking fewer über rides, it’s because of using this app that I decided to delete ÜberEats from my phone one month after installing. With easy access to takeout on my phone, my food spending went through the roof, and quickly. My new rule is that if I want to buy a meal, I have to leave my apartment (unless I’m ill). Having a record of what I was spending forced me to be accountable and make an educated decision. Had I not been keeping track, I’d still be overspending on food and transportation- two necessary aspects of day-to-day life. Once you start tracking your expenses- you can “declutter” your ledger by nixing what you are spending more out of habit or convenience, depending on your personal needs. Doing so will mean having to record less or endure fewer notifications (do not turn those off- otherwise, you’re missing the point), and lead to a simpler, more stress-free lifestyle. The funny thing is that most of the time, you won’t miss and/or realize when you cut out such things- much how I don’t miss ÜberEats, or how you might not miss that magazine subscription or having one less gym membership.

5. Treat Yo-Self

When you are in the savings-game, it is crucial to reward yourself. Trying to eliminate all non-essential spending to save is much like committing to a fat-free diet to lose weight. While it seems like an efficient way to achieve your goal quickly, it often backfires when you reach a breaking point and indulge. Besides- fat is good for you. The point here is to spend smarter in the ways you treat yourself, so that you can still enjoy life, while achieving your longterm goals. The treat yo-self strategy goes a little something like this:

a) Make a list of things you enjoy buying/doing for yourself

b) Write down how much they cost- and together, what percentage of your income they represent. Formula: (happy making spending/net monthly income) X 100%= your “you” money, henceforth “x.”

c) Research less costly alternatives for such items/experiences, and give them a try. Redo the formula at the end of the month to get “y.”

d) Subtract “y” from “x” to get a percentage figure of how much you are saving, “z”: x-y = z.

e) If you want a dollar figure for how much you are saving, divide “z” by 100 and multiply by your net monthly income. Formula: (z/100) x net monthly income = $avings.

f) Transfer these savings to your TFSA, RRSP, or towards debt.

g) High-five yo-self.

Here is an example of how I employ “treat yo-self:” my hair. When I first took the plunge to my signature red, I went to a fancy salon in Yorkville, that coincidentally no longer exists. Between cut, colour and style, I was paying upwards of $300 every five or so weeks to look nice. Looking at this, I experimented with a hairstylist in the Beaches (further from where I lived, so not quite as convenient), but she charged way less, and wouldn’t charge me tax if I paid in cash. I would be paying tops $200, with $35 of that being a tip (since I did not pay tax). This person did a better job, for less, and was wonderful in every way- I still take my mother with me to visit her sometimes.

However, when I started Fashion school, I no longer had the time to travel to and from the Beaches and sit in a chair for at least two hours. For a few months, I did my hair myself, with sometimes great and other times not so much results. Wanting more consistency, I decided to give the Aveda School at King and Church a shot. There are three levels of students there, and the prices are very low, since they are still learning. I opt for the most junior stylists, and have always had a great experience since I started frequenting them a year ago, at the staggering cost of $55-$100 per session (depending on weather I am doing a complete colour or simply roots and pull through). Not only is this a recurring expense that is now much more reasonable, I spend less on transportation in time and money to get there than when I went to the Beaches. The salon is also very beautiful, in a historic building in the St-Lawrence Market area of Toronto, and I don’t feel like I’m settling for something less indulgent. This way, I still get to treat myself and look my best, while saving roughly $200 every five weeks when compared to the original service in Yorkville.

Closing Notes: No Shame in the Savings Game

Thank you for reading my five strategies to get your savings growing. While some of these might seem silly, they all work on basic principles such as habit, access, and smarter spending. Some might be more helpful than others based on your lifestyle, so try out the ones that appeal to you, and stick with what you like. Soon enough, you will surprise yourself with how much money you can “discover” hidden in your day-to-day. If you are someone who has a surplus of reserved capital, and don’t see the need for these strategies- good for you, I am very jalouse. I encourage you to try these tactics anyway, and use your newfound savings to pay for an extra session with your favourite provider, donate to a charity of your choice, or help a loved one in need. Most importantly, remember that there is no shame in the savings game. Everyone is starting from somewhere, and all of us can challenge ourselves to spend differently, so as to reduce stress and ultimately increase happiness. Keep this challenging and fun- the more game-like this process becomes for you, the more you’ll enjoy it, the more you’ll stay engaged. And with that, you are well on your way to becoming Frugal-As-Fuck.

Vivienne xoxo