Money is the number one leading cause of stress for Canadians. At best, our relationship with money is complicated. For many, it’s a constant source of anxiety. Stress around personal finance often leads to an out-of-sight, out-of-mind approach. But money is like a puppy - the longer you ignore it, the fewer shoes you have.
One of the biggest steps to overcoming F.O.F. (fear of finances) is to develop a basic awareness and understanding of what’s happening in your account(s). This is simpler than it sounds. Identifying fixed monthly expenses (i.e. mortgage, rent, vehicle payments, insurance, phone bill, utilities, etc.) is the starting point to figuring out the rest. Deduct that number from your monthly income, and you’ve got your discretionary spending budget. Once it’s clear how much is coming in and how much is going out, it’s easier to stress less and spark some joy instead. Here are a few effective tools to organize your finances:
With the rise of subscription-based services, mobile wallets and one-touch checkout, it’s harder than ever to keep track of discretionary spending. Consider opening separate accounts - one for fixed expenses, one for saving, and one for discretionary spending. Paying for all ‘nice-to-have’ purchases from one account will provide a clearer picture of where your money is really going. If it’s accessible for you, try out the 50/20/30 rule where 50% of your monthly earnings goes towards your fixed living expenses, 20% is immediately transferred into your savings account to be used towards a specific savings goal or towards your financial safety net (more details below) and the remaining 30% goes into a separate account for disposable or discretionary spending.
Stay up to date and current
Don’t delay or avoid looking at bills or account statements - make it a habit to do a weekly check-in, or find ways to make it part of your daily routine. Instead of looking at social media each morning, do a review of yesterday’s spending instead. The more you monitor your money, the more control you’ll have, and the more in-sync you’ll be with what’s coming in and what’s going out.
Build a financial safety net
Most financial experts suggest you have at least 3-6 months of living expenses saved in an “emergency” account. Ideally, this money is held in a safe but accessible savings account. If you need it, you’ll probably need it quickly, so treat your emergency fund as you would cash - what you give up in additional interest you’ll get back in peace of mind. You can set up automatic transfers into your savings account each time you get paid. You can even request that your employer split your paycheck into two different accounts - this is one time when out-of-sight, out-of-mind works in your favour. If you don’t see it, you won’t miss it.
Get in game mode
The key to gamifying your finances is to connect saving, investing and debt repayment with a tangible reward. This can be as simple or complex as you like - either on your own, or with a team of friends and family. A group mentality can help to promote accountability, and add some fun and friendly competition. Challenge a family member to see who can save $200 the fastest. Instead of a book club, set up a friends and finance night. Play the rounding game; check your bank account daily and if it’s sitting at an uneven number, transfer the extra to a predetermined number immediately into your savings account. It’s the law of small returns. Small changes will make a bigger impact over time.
Improve your money mindset
Take a closer look at your beliefs and outlook towards your finances. It’s possible these are holding you back. Swiss psychiatrist Carl Jung said “Whatever you fight, you strengthen, and what you resist, persists.” If you are thinking of your finances as an adversary, they’ll continue to be just that. Make money moves from a state of calm.
Perhaps most importantly, make sure to leave money for what brings you joy. Improving finances by removing what you enjoy won’t result in long-term success. If it’s that first-sip-feeling of a $10 coffee order you look forward to most, ignore the advice to bring your own thermos to work. “Fun money” absolutely needs to be budgeted for (and used) guilt-free. Gratitude also plays a role in developing a positive money mindset. Look around at what your money has done, and is doing, for you. Money is our friend, not our foe. Let’s treat it that way!
Amanda Ashford is a Brand & Communications consultant building brands with purpose and using business as a force for good. As a global traveller, Amanda is constantly inspired by the sounds, scenes and stories found around the world, and our shared passion for purpose that connects us all.
Amanda Ashford is a paid spokesperson of Sonnet Insurance.