It’s budget speech week! And with the anticipation that most things will increase, as they do each year, we could all use some extra savings to pay off debt or even for a much-needed holiday.
How you spend your money impacts your credit score (when buying on credit) and the amount of debt you end up carrying. If you’re struggling with money management, for example, you’re living paycheck to paycheck despite making more than enough money, then here are some tips to improve your financial habits:
Budget: If all it takes to get your spending on track is a few hours working a budget each month, why wouldn’t you do it? Instead of focusing on the process of creating a budget, focus on the value that budgeting will bring to your life.
Use the budget: Your budget is useless if you make it and then let it collect dust in a folder tucked away in your bookshelf or file cabinet. Refer to it often throughout the month to help guide your spending decisions. Update it as you pay bills and spend on other monthly expenses.
Track you’re spending: Small purchases here and there add up quickly, and before you know it, you’ve overspent your budget. Start tracking your spending to discover places where you may be unknowingly overspending.
Don’t commit to any new recurring monthly bills: Just because your income and credit record allow you to qualify for a certain loan, doesn’t mean you should take it. Many people naively think the bank wouldn’t approve them for a credit card or loan they can’t afford. It’s up to you to decide whether a monthly payment is affordable based on your income and other monthly obligations.
Make sure you’re paying the best prices: You can make the most of your money through comparison shopping, ensuring that you’re paying the lowest prices for products and services. Look for discounts, coupons, and affordable alternatives whenever you can.
Save up for big purchases: The ability to delay gratification will go a long way in helping you be better with money management. By saving up rather than using credit, you avoid paying interest on the purchase. And if you save rather than skipping bills or obligations, well, you don’t have to deal with the many consequences of missing those bills.
Limit your credit card purchases: Credit cards are a bad spender's worst enemy. When you run out of cash, you simply turn to your credit cards without considering whether or not you can afford to pay the balance.
Contribute to savings regularly: Depositing money into a savings account each month can help you build healthy financial habits. You can even set it up, so the money is automatically transferred from your cheque account to your savings account. That way, you don’t have to remember to make the transfer.
Choose options that allow for financial flexibility: Everyone needs to build a good credit score at some point in their life and this means being financially savvy and not missing payments which will affect the score and often happens when the debt gets too much. Make sure you have financial flexibility on your terms when looking for alternatives to higher purchase. Your financial situation can change at any time and you don’t want to drown in debt and end up blacklisted.