How to Save Money

My parents paid off the mortgage on a nice home in the suburbs and sent three kids to university on a factory worker's income. This is how they did it:

• Determine a family budget. Add up all sources of income. Add up all expenses (groceries, mortgage/rent payments, utility bills, entertainment expenses, medical/dental expenses, charitable donations, transportation (public transit, car maintenance and insurance, gas), etc. Subtract expenses from income. The money you need to pay for housing, utility and other bills goes in a chequing account. Withdraw only the what you need for daily expenses (food, spending money, transportation) each week and deposit the remainder into a savings account.
• Pay credit card balances in full each month.
• If that's been hard, put credit cards away and pay for expenses in cash. Put the grocery money in one envelope, transportation money in another, spending money in a third. Once an envelope is empty--that's it, no more till next week.
• Do not buy "on time."
• Save for what you predict you will need. If you will need a new car in five years, or you want to go on a vacation later in the year, figure out a savings strategy and pay in full when the time comes. Or don't buy a car or go on vacation.
• Keep the equivalent of 3 months mortgage/rent payment plus utilities in a savings account in case of emergency. Ideally, you should have 6 months worth of savings for all expenses in a high-interest savings account.
• If you have a pet, save for unexpected accident/illness veterinary bills. $50 a month might not even be enough.
• Once you have enough money to support your family for six months in a savings account, don't touch that amount. Start putting savings into retirement savings plans and  education savings plans for your children.
• Shop with a purpose and buy only what you need. Make lists, use the weekly flyer and get what's on sale.
• Replace "recreational" shopping with other forms of entertainment. Replace going to the mall with going to the park or the library.  Replace "emotional" shopping (buying things to make you feel better) with something that might actually make you feel better than going into debt--visit a friend, clean out a closet, take a walk, do a favour for someone who is worse off than you.
• In order to have food on the table and money in the bank, think hard about ways to economize. What can you live without? Cut out or cut down on everything that will make you unhealthy first: cigarettes, alcohol, and junk food.
• Prepare your own food. My parents didn't "stop for coffee" or buy us drinks when we were out. Thirsty? Mom would say, find a water fountain (hard to find today!) or wait until you get home. Take refillable water bottles.
• Support public education in your own community. Send your kids to local schools and government-funded colleges and universities. Working in the summer to save for college education helps kids take their schoolwork more seriously. Our parents paid for the first year's tuition. We knew living away from home, in residence, was out of the question. We all worked summers and part of the year to pay for our expenses, books and tuition.
• Trade services if possible--I once looked after a toddler in my home and in return, his dad installed my new kitchen in his off-hours.