A recent survey by MNP Ltd. Found that 53% of respondents says they are about $200 away from not being able to meet their monthly financial obligations – bills & loan payments.
This is an alarming piece of news and paints a frightening picture of the future financial health of Canadian households, especially if we start to see an increase in interest rates or in the cost of consumer goods.
This kind of financial tightrope act in any home can lead to massive anxiety & stress, but what to do about it? There is no easy fix, but if you can commit to the following four things, it will set you on the right path.
- Make a Budget
It doesn’t have to be anything elaborate. You don’t need fancy charts & graphs. The simple exercise of jotting down your monthly revenue on one side of a piece of paper and your monthly expenses on the other will serve to a) prove to yourself that you are not spending more than you make, and b) possibly identify some spending habits that can be altered.
- Is It a Need or a Want
Seems simple, but if you purposefully ask yourself before making that purchase “Is this a need, or a want?” it will change the way you look at things. Looking after needs obviously takes priority. This applies to large or small purposes – the Starbucks Grande Frappuccino, or the new car. We’re not saying you can’t ever buy what you want, but let’s face it – sometimes there is no room in the budget for wants of any kind.
- Put A Pin In It
One of my work colleagues likes to say this – it means “Let’s think on this & consider it later”. Impulse buying is the opposite of discipline (obviously!) but we all do it & we are all susceptible to it. Large purchases especially can rock your financial world if not carefully thought out. So put a pin in it – take a step back & carefully consider the pros & cons.
- Make a plan to save, then do it!
A savings plan can be comprehensive, with medium & long term goals. We need to consider retirement of course (long term), but also prepare for an unexpected expense (medium term). A major vehicle repair or a washing machine that packs it in can throw your finances into turmoil without some cash set aside to deal with it. But here’s the important part – you can’t just plan to save – you have to do it!
At ATB Financial in Hardisty & Sedgewick, our Customer Experience Advisors can help you on the road to financial discipline. Not sure where to start? A great first step is setting up a regular automatic transfer into a savings account (pay yourself first, as the financial gurus like to say!). Find room in your budget to send as little as $25.00/month to your savings account & we will show you what this small act of discipline will accomplish. We can help you understand the rules around Tax Free Savings Accounts. If retirement is your priority, we can help you with a Registered Retirement Savings Plan. When your planning needs start to become more comprehensive, let us introduce you to our colleagues at ATB Wealth.