Reduce your spending to save more in uncertain times

The COVID-19 pandemic has shifted our spending habits. According to Statistics Canada, the average household spending dropped from $1.75 for every $1 earned in Q1 2020 to $1.58 for every $1 earned in Q2. The last time average spending was this low was a decade ago! However, we are still spending more than we earn. If we’ve learned anything from this pandemic, it’s that we need to live within our means and avoid excessive spending, because we never know when that rainy day may occur.

Categorize your spending

How do we reduce expenses when there are so many factors that affect our spending? It helps to break down your spending into three categories:

  • Needs
  • Wants
  • Savings

It can be easy to confuse needs and wants; awareness of how much you’re spending toward each category is half the battle. Needs are basic necessities, and therefore necessary expenses. For example, you need a roof over your head, which can include expenses such as rent/mortgage, home insurance, property taxes, and utilities. The wants are the nice-to-have items or services, such as trendy clothing, new kitchen counters, a gym membership, or the type of car you drive.

The savings category is where most people need to direct more money, and with a few simple tips, we’ll help you reduce your spend so that more of your hard-earned money is going towards savings.

Document, identify, plan

The first step to getting our spending under control is to create a budget. Budget isn’t a word people like to hear because it means living within a certain financial framework, and is associated with cost cutting. However, the goal of a budget is to ensure your expenses do not exceed your income, which will help you in the long run. 


These days, many of us rely on technology to simplify our lives and cut down on time spent on unpleasant tasks like paying bills. As a result, you may have moved to an automated approach where your bills are debited from your bank account or added to your credit card. Many of us don’t take the time to look at the itemized details of where our money is going. Over time, if you can’t account for where you money is being spent, it can prove to be costly. By documenting the exact dollars you spend every month, you may find some surprises in how much you are actually spending. This step makes finding ways to reduce your spending much easier.

You can also make technology work for you. There are many online tools for budgeting, such as this one from the Financial Consumer Agency of Canada, and even apps to help you save.


Next identify all of the “extras” or extravagances which you do not need. The goal is to either reduce how much you spend, or eliminate it entirely. For example, instead of buying lunch every day, try preparing your lunch at home three or four times a week. This way, you’re not eliminating it entirely, but instead treating yourself once a week. And don’t forget to stop any automatic credit card purchases of services you are not using.

You may also need to identify emotions attached to your spending. Emotional spending may occur when negative feelings (stress, boredom, resentfulness, despair) or even positive feelings (celebrating a raise?) cause you to buy something you don’t need. Identifying these patterns helps you prepare with no-cost or low cost ways to manage these feelings.


Finally, pre-plan for events you know you will be spending money on, like birthdays, holidays or vacations. Set a budget of how much you intend to spend and create a savings plan, so that when the event arrives, you’ve already saved for it and you’ll avoid getting into more debt. The most important thing to do is stick to your budget. If you intend to spend a certain amount, you may need to shop around and plan ahead so you’re not making hasty and costly decisions. 

Once you’ve reduced your spending, you can allocate some of those savings to pay off your debt, and start saving for more important things like an emergency fund, your child’s education, and retirement. A slow but steady stream of savings over time can make a huge difference in achieving your long term goals.

If you need help in getting your debt under control, there are many organizations which can help and some not-for-profit organizations offer their services for free. For a list of organizations, visit Credit Counselling Canada or the Association of Credit Counselling Services. In Quebec, you can contact the Association coopératif d’économie familiale (available in French only) or any organization recognized by the Office de la protection du consommateur.

Written by Salina Shariff, Financial Wellness Leader at People Corporation.