How Do You Lead A Happy Life And Secure Your Long Term Future?

Most people would agree that for a happy life some of the things you need are financial security, leisure activities, good health care and the ability to support your family. All of these require savings. Now, unfortunately, having a good salary is not enough. Many breadwinners out there earn a good income but still have no money to fund these needs because they have no savings. So they are failing from the outgo. Instead of controlling expenditure and putting aside a set amount each month they are spending uncontrollably. This may provide short term satisfaction but may well lead to a very unhappy and unsecure future.

Recent statistics show that 59% of Canadians are living from paycheque to paycheque and that 38% of Canadians have no savings at all. This means that many Canadians are at risk of falling into serious debt as they are not able to save for emergency funds and for a long term happy future. They can forget early retirement and will probably end up working in a fast-food restaurant in their golden years.

This hardly seems the recipe for a happy life but unless Canadians dramatically change the way they manage their finances and start saving money this may turn out to be the future for them.

The good news is all that is needed is some planning and self-discipline to turn things around.


Financial Goal SettingFirst, define happiness! Ask yourself what truly makes you happy and you must need to drill down deep. Start with a list of the immediate things which come to mind which you consider makes you happy then ask yourself why. This will help you determine the root of your happiness which can help you to set meaningful goals. This is the most important task, otherwise, you will be aimlessly pursuing goals which may make no difference at all to your quality of life. For example, there would be little point in stashing away savings in an early retirement plan if you are passionate about your work and would enjoy working long past retirement age. Think hard about what makes you happy set your goals accordingly.

Your goals will provide an incentive to keep you on track with your savings plan. Create a vision board comprising pictures from magazines etc which represent your goals and place this board somewhere prominent to remind you of the importance of sticking to your plan.

You may also try writing down all the bad things about not having savings on one side of a piece of paper and the benefits of having savings for the future on another. This will drive home the importance of you getting your act together and taking control of your finances.

You must share your plans and goals with other family members to ensure they are all on the same page. There is little point in you taking measures to cut your expenses and save money when your spouse is down the town splashing out on news clothes and toys!


To save money you need to: decide your needs and wants, budget, cut your costs, possibly increase your income then implement a savings plan.

Decide Your Needs and Wants

In this exercise, you need to be brutally honest and list out your needs and wants. Your needs are things that you need to survive and wants are things you like to have but are not really necessary and therefore may be cut to make savings. The more severe you are with yourself in this exercise the more you will save and the more secure your financial future will be. For example, most people will argue that a cell phone is a need but what did we do 30 years ago? Is it absolutely necessary? This may be a bit severe but it gives you an idea of the way you should be thinking. Challenge everything including yourself.

The 50/30/20 rule will help you to determine if you have a realistic plan for allocating your salary. This rule states that 50% of your salary should be for needs, 30% for wants and 20% for savings. Adhering to this rule will help you lead a financially balanced, secure and happy life but remember it is for guidance only!

By cutting out a few wants you can start saving money straight away which will motivate you to progress to the next stage, budgeting.


Budgeting is arguably the most important part of any savings plan. If you do not control where your hard-earned dollars are going they will find a place themselves and it will not be your savings account! They will hide away in Starbucks coffees, wine bottles, nights out and other bottomless pits!

So where to start? First, look at your vision board and remind yourself why you are going to all this bother. You need an incentive to stay on track for the long run.

The next step is to record where your money is presently going using the envelope method. Each day save your receipts and place them in the appropriately labeled expense envelope. You may have an envelope for groceries, another for gas, another for entertainment, etc. At the end of the month add up the receipts in each envelope and add the expense totals to an income and expense table. This is called the “shock method” as you will very likely be shocked at the amount you spend in each expense category especially on things like coffees, liquor, eating out and other feel-good activities.

Using an income and expense spreadsheet you can decide which areas to cut down in order to balance your outgoings with your income. An example with detailed instructions may be found here.

IMPORTANT: Be sure to include an amount for “Savings” in your income and expense sheet and set up a pre-authorised payment from your chequing account to your savings account for that amount preferably on a payday so it is captured before other expenses come out. Also, be sure to allocate an amount to an “Emergency Fund” otherwise unforeseen events will crop up and you will need to dip into your savings or use a high-interest credit card to deal with them.

Cut Your Costs

This is the most fun part as there is nothing better than doing something cheaply and saving a buck! The examples listed below are just to give you some ideas. Try and get in the mindset of always questioning “can this be done cheaper”. These small cost-cutting measures will accumulate into significant savings each month which can be stashed away to help you reach your future goals. Remind yourself always that these are small sacrifices compared to the long term happiness you will experience!

Buy in Bulk – it is usually cheaper to buy in bulk from stores like Costco. Do not get carried away though and only buy what you can consume within the expiry period of the product.

Cut out cable TV – do you really need all these channels? Try just using Netflix at around $8 or $9 per month or read some good books!

Vouchers – save up and use discount store vouchers. With some careful planning, you can save a fortune each week in grocery bills.

Nonbrand – try buying non-brand products which are usually cheaper and of similar quality. Big savings can be made by buying nonbrand drugs. I recently bought the exact chemical equivalent to Asprin for half the price!

Discount stores and Charity Shops – These are great for furniture, clothing, and shoes, etc. Try a charity shop in an affluent area such as West Vancouver, you will be amazed at the quality of items donated.

Car Share – Speak to your co-workers who live in your area and work out a rota for car sharing. This may allow you to get rid of that second car!

Small car – Get rid of your gas-guzzling truck and buy a small economic car. You may no longer be king of the road looking down on fellow road users but you will save a ton of money and will soon overcome your insecurity!

Stop data on the cell phoneDo you really need cell data? Can it wait until you get in an area with WIFI service? Don`t be a slave to the telecom companies.

Barter – exchange goods and services. If you are a plumber you may offer to fix your neighbor`s furnace in exchange for him servicing your car if he is a mechanic. Huge savings to be made here.

Organize a street market where all your neighbors display and exchange stuff they no longer need.

Brown bag it. Don’t eat out at all for lunch at work, take a packed lunch.

Don’t buy bottled water – A complete waste of money in Canada where millions of dollars are spent producing drinking water of a very high standard. This will save you money and cut down plastic in the environment.

Make coffee at home – 10 cents to make your coffee at home, say $3.50 from Starbucks. Enough said!

Increase Your income

One of the quickest ways to accumulate spare cash for your savings plan is to increase your income:

Try asking your boss for a pay rise. If the answer is no then why not? Do you need to consider some extra training for a promoted post? Should you consider working for another company?

Consider working a part-time job one or two evenings a week or get a weekend job.

Try selling products online. You may be good at arts and crafts or have a particular skill set that can be sold online. Some people have specialist knowledge in a particular niche product and trade on a platform such as Amazon. There are so many things you can sell online. Brainstorm all your ideas and test a few of them out. Do not shell out a lot of money until you have tested the product online to see if it can be profitable.

Use an established business opportunity. There are many business opportunities which have been successfully operating for many years and have helped people earn extra cash at low risk. World Financial Group, Amway, Tupperware, Send Out Cards, Avon, Jani King to name a few. Remember to always research thoroughly first and be very cautious if any large upfront payments are required. Try and chat to some people who are already involved in the business first for an unbiased opinion.

Whatever you decide to do make sure that you enjoy the work and that most of the extra dollars are directed towards your savings plan rather than being squandered on luxury items or untracked expenses.


Where to save moneyNow that you have systems in place to cut your costs and manage your money where should you place the resulting savings?

The first place to save your money is in your chequing account. Aim to have an amount equivalent to one month`s salary saved in your chequing after all your regular monthly expenses have been covered. This breaks the precarious cycle of living from pay to paycheque with no funds to cover fluctuations in costs. If you do not maintain this cushion of one month`s salary in your account you will likely end up drawing on your savings or fall into debt to cover unforeseen monthly costs. Do not confuse this with the emergency fund which is for larger one-off events.

Once you have a one-month salary cushion in your chequing account it is time to decide where to direct future savings. It is advisable to speak to a financial planner for advice on investments and retirement plans as the scope is too wide to discuss here.

When deciding where to place your savings two things you should consider are risk and interest rates.

First a quick explanation about the power of compound interest. Compound interest is where you gain interest on interest rather than just interest on the original deposit (simple interest). For example, if you deposit $100 in an account yielding 10% annual interest then the interest earned after one year will be 10% x $100 = $10. The next year when compound interest is applied the interest earned will be 10% x ($100 + $10) = $11. If you were earning simple interest the 10% interest rate would only be applied to the original $100 deposit each year. A simple rule to work out how long it would take to double your money in a compound interest account is the rule of 72. This rule states that if you divide 72 by the annual interest rate the answer will be the number of years it takes to take to double your money.

When investing your savings you need to decide what degree of risk you are comfortable with. Generally, the higher the risk the higher will be the potential gain or loss in your investment. If you opt to place your money in a high-risk investment plan then you may make a lot of money but equally, there is a reasonable chance you could lose a lot of money. Lower risk plans are generally safer and the chances of losing money are less but it is also the chances of making a lot are less. Do not get carried away with your hopes and emotions, it is important that you are cold and calculating when making decisions and that you listen to your financial advisor.

Finally, before deciding on any savings plan refer back to your vision board and goals and always take these into account before making any important decisions.

After all your efforts to save money make certain that your financial plan for these savings aligns with your goals for a happy life otherwise, it has been a pointless exercise!