Money management: How to save money on a tight budget

July 29, 2025

George Yang

Times are tight for most Canadians. According to H&R Block Canada, 85 per cent feel that living paycheque to paycheque is the new normal, and coping financially can make prioritizing savings strategies feel almost impossible. If you’re interested in ways to cut expenses and save money, all is not lost. By prioritizing budget planning, practising money saving tips, and slowly building your savings, you can create a financial future for yourself that allows you to sleep a little more comfortably at night.

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Always start with budget planning

Simply put, it’s impossible to manage your finances without having a budget in place. According to a recent survey from TD Bank Group, Canadians are feeling “cautiously optimistic” about their finances in 2025. That same survey also reported that 61 per cent of Canadians don’t have a financial plan, and 70 per cent don’t use any type of budgeting tools to plan, track, and manage their finances. This disconnect suggests that many people are making financial decisions without a clear understanding of their personal situation. Whether you opt to plan your budget with a full-service app or just a spreadsheet, the simple act of planning will automatically give you a head start over the vast majority of Canadians.

Budgeting tips for beginners: Embracing the 50/30/20 budget

Since many Canadians don’t have a budget in place, the process of building and sticking to one may feel overwhelming; it doesn’t have to be, though. When it comes to cost cutting, sometimes simpler is better, and a 50/30/20 budget can be an easy guide to follow.

Allocate 50 per cent of your income to your needs, like rent/mortgage payments, groceries, and insurance;
Contribute 30 per cent of your income to your wants, like entertainment, hobbies, and trips; and
Use 20 per cent of your income for savings or repaying debts, depending on your circumstances.

With this simple method in place, you can create spending habits that always consider essential expenses first, while still leaving room to treat yourself and repay debt or plan for the future.

” 85 per cent feel that living paycheque to paycheque is the new normal ”

Fixing the faucet: Identifying money leaks and other money saving tips

Unfortunately, when managing a tighter budget, the room for error between saving and overspending is small and can only be found when you dig into the details of your spending habits:

Manage your money leaks: Money leaks are small expenses that add up over time. By combing through your monthly bank or credit card statements, you might notice some of these trends. Whether it’s buying a coffee every morning before work, keeping a gym membership you rarely use, or paying for a streaming service you no longer watch, all of these smaller expenses add up. With a few tweaks, you might find yourself saving $100 to $200 a month with little to no impact on your lifestyle.
Focus on food: While food costs continue to balloon, there are still opportunities to find savings. This can include making a list before grocery shopping to minimize impulse purchases, freezing leftovers or foods near expiration dates, and being flexible on your produce depending on the time of year. It doesn’t necessarily mean you can’t order in every once in a while, but if you do, consider choosing the pick-up option to avoid delivery fees, service fees, and a driver tip.
Look for low-cost entertainment: In the midst of watching how every dollar is spent to prioritize savings, it can feel a little discouraging to have less money to spend on yourself and your loved ones. While enjoying some forms of entertainment may be unrealistic on a tight budget, there are many others that can fill this gap. Using public services like libraries for free books, community centres for low-cost classes and workshops, and public trails for physical activity is a great starting point. You can also consider buying second-hand items, either online through Kijiji or Facebook Marketplace or in person at thrift stores. You might even find it satisfying to score some unexpected deals or interesting finds.

Saving for the unexpected: How to build an emergency fund fast

Trust us: you can start saving for unexpected expenses, even if it’s in small increments at first. If you prefer to manage with cash, you can practice “cash stuffing,” where you use envelopes to divide your monthly allowances into categories, with some allocated to an “emergency” envelope. If you manage digitally, authorizing weekly automated transfers, even $5 to $10 at a time, can create some breathing room.

When our finances are stretched to the limit, the prospect of digging into your budget can feel like an insurmountable task. By facing this challenge head on, however, you might be surprised to find there are some savings to be had. And, over time, you might begin to see the benefits of your hard work by paying off debts quicker, putting money aside for emergencies, or reducing your overall anxiety about your finances and future.

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