Spending too much? Check out these helpful tips
We all enjoy rewarding our hard work with the occasional new pair of shoes, or dinner and a movie. But those rewards, combined with regular monthly expenses, can really add up. You can live within your means - and avoid debt - by trying these helpful tips.
Create a monthly budget
A budget can help you understand your income and expenses, making it easier to find ways to save. Start by writing down all your income from your job, pension, or anywhere else, and then all your fixed expenses, like car payments, cell phone bills or mortgage payments.
What's left after you subtract your fixed expenses from your income is the money you can use to budget for variable expenses – things like groceries, movies and clothing.
Categorize your variable expenses into groups (such as entertainment, travel and food), and then give yourself a monthly budget for each group.
Use a budget calculator
Budgeting might sound time consuming but it doesn't have to be. There are lots of online tools to help you create a budget, including:
- Plan your retirement tool on www.grsaccess.com
- Budget calculator http://itools-ioutils.fcac-acfc.gc.ca/BC-CB/NetInc-RevNeteng.aspx on Canada.ca
Start asking, Do I really need this?
Try waiting a day or so before purchasing something, and maybe you'll decide you really don't need another set of drill bits after all.
Pay in cash
Consider trying a cash-only rule when paying for your variable expenses. This helps you physically see how much money is leaving your wallet, which is much harder to gauge when you're swiping a credit card.
Set aside an emergency fund
Avoid being caught unprepared for unexpected costs by setting aside three to six months of expenses. If your car breaks down, or if you have to take time off work, an emergency fund will keep you from relying on your credit card or taking out a loan.
Tweak your fixed expenses
Review your monthly expenses to see if there are any services you could go without or don't use that much. How about downgrading your TV package? For everything else, try calling your provider to see if you can get a better deal.
Saving in an RRSP? So are your friends!
Word on the street is Canadians are saving for the future. In fact:
- 52% of millennials are saving
- 75% of gen-Xers are saving
- 80% of baby boomers are saving*
No matter your age, it's a good crowd to be in. How much money could you have if you retire when you're 60?
If you start saving $200 a month now
- And you're 25, you could have $222,596.
- And you're 35, you could have $117,624.
- And you're 55, you could have $13,618**.
Check out the contributions calculator on smartpathnow.com to see which savings amounts work for you. Beat the RRSP deadline and set up automatic contributions or make a lump-sum contribution by March 1, 2019.
*Source: When Can I Retire? (no date) franklintempleton.ca/en-ca/investor/planning/retirement/
**How did we figure out these numbers? By using a group plan rate of return (including fees) of five per cent.
Did you know?
The Great-West Life Centre for Mental Health in the Workplace site has mental health self-assessment tools, information on treatment, videos, and job-specific strategies for both employers and employees.
Using the site can help you flag mental health issues before they get worse, or even stop them before they begin.
How to get started
Visit http://gw3.ca/MentalHealth to learn more.
TFSA Or RRSP? Where should you put your money?
You've got goals. And depending on what you're saving for, where you keep your money makes a difference. Welcome to the TFSA vs. RRSP showdown. See how each plan type works so you know where to put your money.
The views expressed in this commentary are those of Great-West Life at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Prospective investors should review all documents relating to any investment carefully before making an investment decision and seek guidance based on their specific circumstances.