BLOG: CBC Radio host shares three tricks she uses to manage her money
You may be surprised to know that I have a finance degree, I worked in personal banking for several years, and have facilitated financial literacy workshops for individuals, and organizations. I know a thing or two about personal finance and I want to share some tips.
KNOW THE FACTS
There's a difference between knowing how much money you have in your head, and actually taking the time to calculate it out. Sometimes that difference is hundreds of dollars! Financial literacy starts with knowing your full current financial situation. Start with a single month and list all your income and expenses but don't stop there, track how much money you are actually spending and all the sources of income.
You don't have to make that next month's goal, pull out your bank statements for the last couple of months and itemize where your money has been going. Do you spend $300 a month on fancy coffees? Think you're only buying one pack of cigarettes a week but it's actually three? Are you still spending money on Beanie Babies? These are things you should be fully aware of and can help you build a realistic budget
DIVIDE AND CONQUER
It can be hard to stop yourself from accidentally spending money earmarked for obligations, when it's all in the same account. I always recommend you have at least two chequing accounts, one for fixed expenses (rent/mortgage, insurance payments, etc.), and one for variable expenses (clothing, entertainment, food). Opening a second account is often just a matter of a few clicks in your online banking. With the help of a customer service representative, you could even go as far as removing access to that account on your bank card if you want that extra level of accountability.
Once you receive any income, immediately separate amounts earmarked for fixed expenses and DON'T TOUCH IT. Have a $900 payment at the end of every month? Transfer $450 into that account every paycheque and avoid that end of the month pinch. You'll feel better knowing that the money that is left in your other account is all for you to spend on things that are variable for you. You can weigh the option of an impulse clothing purchase against eating ramen for a week, with the comfort of knowing you'll still be able to make rent at the end of the month.
And of course, you have savings account(s) that you are contributing to regularly right? Good.
HAVE A BUDGET
We often associate budgeting with restriction, but a budget doesn't have to be a restrictive thing! In fact, I find it best to have a budget that actually matches your lifestyle. If it is important for you to go out for dinner every night of the week, put it in your budget. See if you can fit it into your financial goals. A budget is an opportunity to to dream for your future, and live without guilt in the present.
I'm old school in my budgeting, I like using an Excel spreadsheet, but there are so many budgeting applications for your phone, or desktop. Find the one that works for you.