According to the BDO Canada Affordability Index, more than half of all Canadians are living paycheck to paycheck, one in four say they’re overwhelmed by debt, and 27% say they don’t have enough money to cover living expenses. A lot of people are stretched thin. If you’re one of them and you’re curious about how to budget and save money, we’ve compiled a list of budgeting tips to help you get a handle on your finances and live within your means.
10 Effective Budgeting Tips to Help You Live Within Your Means
Many of us need help to keep our spending in check. But the good news is that taking control of your finances doesn’t have to be a chore. In fact, with a few simple budgeting tips, you can transform your finances and achieve your financial goals.
Know How Much You Make
To truly live within your means, you have to know what your “means” are, right? This goes beyond knowing how much your cheque will be on payday. Do you have a side hustle? Do you freelance? Sit down and do an honest tally of your net take-home pay from all your income sources for each month. Don’t include personal items you sell, etc., as this income tends to be less predictable. Stick to the money you know you can rely on from month-to-month.
Track All Expenses
Really want to save your money? Take an honest look at your expenses. This goes beyond your rent/mortgage, utilities and food. Think about car payments and gas. Eating out. Shopping. Take a month or two and save all your receipts and credit card statements. Consider each line item. This will give you a true picture of how you spend your cash each month.
Spend Less Than You Make
This is where the rubber meets the road. To truly live within your means, you must spend less than you earn each month. It’s managing money 101. Once you’ve tracked all your expenses, you can identify unnecessary spending and areas where you can cut back or eliminate purchases altogether. Start small to keep things manageable. Then, once you’ve re-wired yourself to spend less in a particular category (like eating out or drive-through coffees), move on to the next one.
And remember: if you can’t afford to buy something, don’t. It’s easier said than done, but financial self-control is fundamental to success.
Create an Emergency Fund
Unexpected expenses will happen. They always do. And when things go haywire, an emergency fund can protect your budgeting efforts from going bust, too. The rule of thumb is to save three to six months’ expenses. If you’re just starting, automate a small amount of money to go into a savings account you can’t easily access. Adopt the “set it and forget it” mindset. You’ll be surprised at how quickly the money will grow. And when things go wrong, you’ll have money to cover the expenses without having to do any unnecessary spending.
Avoid Using Credit Cards
One of the best ways to save money? Don’t use your credit cards. Or, if you do, pay them off each month. People sometimes think that a credit card is a source of income. If they don’t have the cash, they swipe the card. But that’s the fastest way to spiral into debt. To live within your means, skip the plastic and stick to cash.
Try the 50-30-20 Budget
The 50/30/20 budget is a popular and effective method for living within your means. Here’s how it works:
- 50% for your needs
- 30% for your wants
- 20% for savings and debt repayment
While establishing your budget, you might find that 100% of your income goes towards needs. That’s okay! The key is to track your spending for a month to see where your money goes. Once you have a clear picture, you can start looking for ways to trim expenses in the “wants” category.
Pay Off Your Debt
Start by listing all your debts, including credit cards, personal loans, and any outstanding lines of credit. Note the interest rates for each. Generally, focus on paying off debts with the highest interest rates first. Allocate a set amount of extra cash each month on top of your minimum payments to those debts.
Paying down debt requires some sacrifice. Review your budget and see where to reduce unnecessary expenses, such as eating out less, finding cheaper entertainment options, or cancelling unused subscriptions. Moreover, prioritizing your debt will help you live within your means.
Save Before Spending on Large Purchases
Do you dream of a new car, a vacation, or a down payment on a house? Set specific savings goals and allocate a portion of your automatic transfers to each. Schedule automatic transfers from your checking account to your savings account each payday. This way, you’ll never even miss the money! Most banks and financial institutions offer this feature, allowing you to customize the amount and frequency of your transfers.
Avoid Renting Consumer Goods
No upfront costs? Easy monthly payments? Is it too good to be true? Well, it often is. Renting can be a convenient option in certain situations, but buying is a smart move for most everyday consumer goods. Do the math, consider long-term value, and weigh the benefits of ownership before swiping your card for that rental agreement.
Think about how long you’ll realistically use the item. Buying might be a better investment if it’s a high-quality good lasting for years. With renting, you have no ownership rights – you simply have temporary access. On the other hand, renting might make more sense if it’s a trendy gadget that will be outdated quickly.
Seek Alternatives
If facing a financial hurdle, explore other options before turning to cash advances. Talk to a credit counsellor, consider a personal loan with a lower interest rate, or look for ways to generate additional income.
Responsible Practices When Borrowing Payday Loans
While the ideal scenario is to have a well-funded emergency savings account to handle unforeseen situations, that’s not always the case. If you are considering payday loans, here are some responsible borrowing practices to keep in mind:
- Explore Other Options First. Before applying for payday loans, explore other avenues. Negotiate with creditors for payment plans, see if you can borrow from friends or family (with clear terms), or consider selling unused belongings.
- Borrow What You Can Afford. Only borrow the amount you can repay by your next payday. Don’t get caught borrowing more to cover a previous loan.
- Understand the True Cost. Before taking out a loan, understand the interest rates and fees involved.
There are other ways to manage unexpected expenses. Building an emergency fund and living within your means is the ideal solution. Even small, regular contributions can add up over time and provide a financial safety net for those unexpected moments.
Need a Quick Loan for Emergencies? Online Payday Loans Can Help!
Getting the hang of living within your means can take a while. If you find yourself coming up short on cash from time to time, a payday loan from Speedy Cash can help. Payday loans are short-term loans that provide quick cash until your next paycheck arrives. We offer flexible and fast payday loans that can get you the money you need the day you need it within 30 minutes upon approval. And you can qualify even if you have less-than-perfect credit because we don’t do a credit check.
