Everyone wants to save money, but let’s face it: there are way too many temptations out there that cause even the most budget-conscious consumers to take brief breaks from their financial discipline habits. The cool car that’s come down in price, the new digital device that does everything but clean the kitchen sink and even the overpriced coffee on a daily basis that can be purchased much more cheaply down the street are all examples of how people stray from their budgets.
Sound familiar? It does to Ed Rempel, too. A financial blogger and fee-for-service financial planner, Ed Rempel has seen and heard it all. He’s also helped thousands of Canadians get their financial houses in order and keep them there.
Here, Ed Rempel reviews 3 ways you can achieve your financial goals and stick to your budget.
Create a budget.
“This is relatively easy to do,” Rempel says. It really just comes down to planning your money-in and money-out. Starting with your monthly expenses, determine where the money needs to go. This can include mortgage payments, car loans, utility payments, Internet and television bills, groceries, and other fixed costs. Then, there are variable items like credit card bills and other debts you might have.” Also, he advises considering how much you plan to save each month, whether in a bank account or other investment vehicle. Once you’ve listed these cost projections, take a close look at your income, from paychecks to investment payments. Determine how much monthly income you’re spending on these items. Now, you have a balance sheet.
Figure out what’s left over.
The excess of monthly income remaining after you’ve allotted your money to the necessary expenses, savings and investments is how much you have to spend each month on non-necessary items. This provides you with an opportunity to figure out how much of your “walking around money” you can spend, and on what.
“It’s actually a good idea to plan this out as well,” says Rempel. “For example, buying a cup of coffee once a day for five days a week will cost how much? How about going out to lunch vs. packing a lunch for work? If you can be disciplined with these incidental costs and even forego them on occasion, you can spend more money on something special when the opportunity arises.” What you don’t want to do, says Rempel, is overspend in this area, which could result in you taking money from your necessary expenses, then having to make that up later. It’s what’s sometimes called “robbing Peter to pay Paul.”
Get thrifty.
If you’ve ever saved up for something you really wanted, you already realize the importance of being thrifty. This is always a good idea, but especially when you’re maintaining a budget or in the event that you find yourself living paycheck to paycheck, as many people do.
“There are many ways you can develop conservative spending habits and practice them on an ongoing basis,” adds Rempel. “For example, watch for sales and take advantage of them. Begin clipping and using coupons. Join a warehouse club, buy in bulk and save. Look for BOGO (buy one, get one) opportunities.”
Rempel also notes that teaching yourself to be a good negotiator when buying big-ticket items, like a car, can help you save money. A little goes a long way, but you need to start doing it and stay consistent.
Make smart decisions.
Here are the 5 steps to being in control of your money:
- Understand where your money goes. Track your spending.
- Decide where you want your money to go.Look for obvious places you can spend less.Are you spending money on things that are not important to you?
- Get a Financial Plan, so you know how much you need to save to achieve your long-term life goals.
- Consider your values. What’s important about money to you? If what you want to spend and what you need to save are more than you earn, then adjust it to live within your means, based on what is most important to you.
