Top 6 Tips to Help You Manage Your Expenses
Financial stress can have an overwhelming effect on your mental and physical health and without some good strategies or support in place, it can feel impossible to get through. Whether you’re drowning in debt and struggling to make your monthly payments, not earning enough to maintain the lifestyle you’re living, or simply wanting to get a jump start on saving for a home or retirement, there are plenty of resources available to help you get on track with your goals.
If you’re having a difficult time managing your money, know that you’re not alone—there’s a reason why Financial Literacy Month dedicates its first week to the topic! There are plenty of free services and professionals out there who are happy to help you regain your financial confidence.
To get you started, here are some tried-and-tested ways to begin to feel in control of your money again (or for the very first time!).
1. Take a good, honest look at your finances
Take a deep breath and lay it all out on the table. This part can feel overwhelming and you’re probably a bit scared. That’s completely normal and further proof that you need to take a closer look at your finances. Make sure to include all outstanding debts and take note of any high expenses that are overextending your income each month.
2. Set realistic goals for your money
Take the time to outline your long-term financial goals—be specific and prioritize them. You might even want to write them down and put them somewhere that you can see them every day for some extra motivation.
Whether your goal is to get out of debt, own a home, travel the world, go back to school, or retire early—all of these goals will be affected by how you manage your money.
3. Budget, budget, budget
Yes, you’ve heard this a hundred time before and your eyes are already glazing over. But, trust us and finally hear this advice—creating a budget is the one step that makes every other financial goal achievable.
4. Say goodbye to cable (and other discretionary expenses)
One of the easiest things you can do to take control of your finances is to cut your monthly expenses.
There are certain fixed costs that are unavoidable like your rent, insurance, and car payments but you can look for smaller, variable expenses to cut out. Start with simple things like skipping your Starbucks coffee every morning, pack your lunch instead of eating out, or cut your cable.
Cancelling your cable is a quick way to save hundreds of dollars every month—but even cutting an unnecessary expense of just $25 out of your budget can lead to a savings of $300 for the year!
5. Pay off costly credit card debt
Do you know how much you’re paying in interest on your credit card debt? It’s probably close to 18% and at that rate, it’s impossible to make a dent in that debt if you’re just making the minimum payments.
One recommended strategy is to pay the minimum payment due each month on all your credit cards, and then add more money to the card charging the highest interest rate—you can use the money you’ve saved by cutting your cable and making your lunch each day.
When the balance on your highest-rate card is paid off, you transfer the extra payments to the credit card with the next-highest interest rate. Rinse and repeat.
6. Build up an emergency fund
Unfortunately, life can throw large expenses your way when you least expect it. And while you can’t mentally prepare for every emergency you’ll face in your life, you can do your best to financially prepare for it. Make it a priority to put money from each paycheck into your emergency fund and aim to build up three to six months’ worth of expenses.
If you are struggling with debt and not earning enough to put money aside, building up a substantial emergency fund might feel unattainable. Try your best to put aside $50 each month and you’ll see that it quickly adds up to a useful little nest egg and when you’re inevitably faced with an emergency, you won’t have to worry about the financial side of the equation. Instead, you can focus your energy on the emergency at hand (your future-self thanks you!).
You don’t have to be a finance whiz to manage your money well – but it’s important that you understand the basics. Try to include a few of these tips into your everyday life and you’ll feel more financially secure (and savvy!) with each passing day.
All month long, the Financial Consumer Agency of Canada (FCAC) will be featuring guest contributors in support of Financial Literacy Month.