It is well known that the life of cicadas is a pleasure. The ants tend to have low morale. How could it be otherwise since they are constantly busy building up food reserves?
This way of seeing things is expressed in a thousand and one ways around us. This week at the office, a colleague said that following advice to save money results in a “sad life.” A fairly widespread opinion, if we trust the statistics on debt, which encouraged me to return to read a well-written text from the Toronto Star listing the secrets of ultrafrugal people.
His introductory sentence: “Many people who are very frugal are very satisfied with their lives. »
This is important to mention and repeat, because it seems counterintuitive, especially for those who buy clothes or wireless headphones on credit. This group is very well stocked since Canadians have the highest debt rate of all the G7 countries. And from afar.
For every dollar earned, households owe $1.84, while the average is slightly below $1.25. Can you imagine all the interest that would be saved if our ratio were brought to the same level as in other countries?
I asked economist Benoît Durocher, from Desjardins, if he could estimate the amount that this represents. The available data unfortunately does not allow this. But we are clearly talking about billions of dollars, he assured me. Can you imagine all the interesting, useful and constructive things we could do with this mountain of money?
Now let’s play with Lesley-Anne Scorgie’s tricks, the one who signs the paper of the Toronto Star. For each, give yourself a score out of 10 to obtain a final result out of 100. This self-assessment will give you an idea of your room for maneuver to improve your savings rate.
1- They live below their means
That’s the basic thing. The most frugal people configure their lives based on 80% of their income. It could be 75%, it could be 85%. But the important thing is to deceive yourself about your income and save the difference. Calculate the amount of money that this 20% represents on each paycheck and draw up a list of expenses that you could eliminate to top up your TFSA or pay off your credit card. Prioritize eliminating anything that doesn’t make you happier.
2- Budgeting as a way of life
Thrifters track, check, refine and monitor their budget. They know where their money is going and when costs increase or decrease. It’s no more complicated to understand a budgeting tool than it is to follow a hockey pool with hundreds of constantly changing statistics. Word from my rigorous sports colleagues.
3- Bargain hunting amuses them
Keeping your hard-earned money to yourself can become a game, as can searching for bargains, sales and offers of all kinds. By the same logic, frugal people maximize the use of loyalty points. They trade their house to travel. They consult price comparison sites.
4- Their debt for assets, not for consumption
Thrifty people limit themselves to “good debts”, those which are guaranteed by an asset whose value should increase. They buy real estate, grow their businesses and invest, but avoid carrying a balance on a card or line of credit.
5- They don’t joke with their financial strategy
Even if they do a series of things on their own to save, most do not construct their own financial plan. They consulted a professional who built them “a comprehensive plan that takes into account taxes, investment growth, risks and life needs.”
6- As in sport, consistency is the key
Getting into the habit of investing regularly and systematically is a crucial ingredient. This could be every paycheck or every month. During periods when their income is lower, ultrafrugal people do not stop saving, they adapt their contributions.
7- They try to reduce their taxes
Without tax evasion, they use strategies to pay less taxes, such as contributing to an RRSP, a TFSA, an RESP, a CELIAPP. They also benefit from all tax credits (medical expenses, childcare, charitable donations).
8- They are on the same wavelength as their partner
“Financial misalignment is costly,” says Mme Scorgia. Couples who save talk about money as partners and plan their finances as a team. I would add that we must row in the same direction, thanks to common values. Difficult to do for an ant and a cicada who share the same bed…
9- Happiness is not in money, but in what it provides
Thrifty people have no difficulty maintaining motivation because they understand that their money gives them flexibility. It could be for retirement, for travel, to take a year without pay, to help your children… Find your own synonym for freedom, the one that will catalyze your interest in saving.
10- Being able to close the tap immediately
The last tip comes from my colleague Camille Dauphinais-Pelletier, who favors “little luxuries” which can be eliminated without worry during tighter months or in the event of a big problem (loss of job, leaking roof). Instead of annual subscriptions and medium-term rentals (chalet, car), she prefers restaurants and the outdoors.
My grade would earn me a nice A in a report card, and I’m not sad at all. YOU ?
Do not hesitate to share your thoughts on the subject by writing to me at [email protected]. Your comments could be published in a future column.