Managing your money is easier than you think, and you don’t need a high income to do so. The key thing to understand is that what works for some people may not work for you. As long as you can come up with a routine that you’re comfortable with, you can balance your budget and keep your spending under control.
Here are some tips to help you manage your money and spending.
Track your spending
If you’re constantly wondering where your money is going, you may have a spending problem. Fortunately, there’s an easy solution: track your spending. For the next two to three months, log everything you spend money on, including things such as your housing costs, bills, groceries, and entertainment. Any time you spend money, write it down. The idea here is that you want to see where your money is going. You might quickly realize that you’re spending more on certain categories than you thought.
Once you’ve got all the numbers in front of you, you can come up with a realistic budget. This will allow you to reallocate your funds to things that matter the most to you, such as debt repayment, retirement savings, or even taking a vacation.
Use cash instead of credit
While credit cards can be an important tool to help you manage your finances, research shows that people spend more when charging their purchases. It shouldn’t be a surprise when you think about it: With credit cards, you never see how much you’re spending unless you’re actively checking every day. On the other hand, with cash, you’re physically seeing the money leave your wallet or bank account. Generally speaking, most people will start to spend less when they start seeing their funds drop.
Pay yourself first
Most people know that saving money for the future is important, but they’ll do so with any money they have leftover at the end of the month. The problem is, quite often there’s limited funds left, so your savings rate may be quite low.
If you flip the script and pay yourself first, you can ensure you’re always meetings your savings goals. Paying yourself first means including savings as part of your budget. For example, let’s say you want to put aside $100 each month for a home down payment. What you could do is set up an automatic transfer of $100 to go to your savings account each month. Since the money will be gone right away, you won’t even notice it missing. Over time, you can slowly increase how much you’re putting aside.
Cut back on regular expenses
When analyzing your budget, be sure to pay close attention to your recurring expenses, since it’s typically the easiest category where you can cut back. First, look at any subscription services you have, such as streaming services, apps, or meal kit deliveries. If you’re not using these services regularly, cancel them.
You’ll also want to take a look at the services you use regularly, such as your home internet and wireless phone. Check what you’re currently paying and compare it to other services available to you. Be sure to look at smaller companies that provide similar services since they typically charge less. If you find a better deal, make the switch since it can save you quite a bit.
Push off any major purchases
If managing your day-to-day expenses is a struggle, it’s a good idea to delay any major purchases for the time being. The definition of major purchase will differ for each individual, but the idea is that you don’t want to spend money on anything you don’t need right now. That could be a vacation, new computer, or a new outfit.
One trick you can implement is to set an amount for yourself. For example, you could tell yourself that any purchase over $250 will require you to sleep on it. If you wake up the next day and feel like you still need it, then go ahead and buy it. However, if you start second-guessing yourself when you get up, then you probably don’t need that item.
Price compare whenever you can
You can’t put off every purchase, so when you do spend, you’ll want to make sure you’re getting the best price possible. Flyer comparison apps allow you to see the current flyers from all the retailers in your area, which can provide quick price comparisons. In addition, you can search for specific items, so you can always find the lowest prices. These apps cover every type of store including grocery stores, big box stores, and home renovation stores.
Consolidate debt when possible
Anyone with high interest debt, such as credit card debt, should focus on debt repayment. The easiest way to do this is to consider getting a line of credit from your bank. Although this is another type of loan, it typically comes with a much lower interest rate. You would take the funds from your line of credit and then pay off your high interest debt. Then, you’d only have to worry about paying back your line of credit. By doing this, you can greatly reduce the amount of interest you pay.
Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. As a completely self-taught, do-it-yourself investor with no formal training, he makes money easy to understand for all Canadians. His specialties include personal finance, budget travel, millennial money, credit cards, and trending destinations.
Barry Choi is a paid spokesperson of Sonnet Insurance.