Category: Good money habits

Are you trying to save up for a big purchase, such as a new car, but having trouble? Budgeting for big expenses can be challenging, especially if you’re unprepared! However, with proper planning and organization, you can ensure you have the funds you need when making a big purchase.

Here are seven great tips to help you budget for big expenses:

1. Determine your goals.
2. Calculate the cost.
3. Prioritize your expenses.
4. Create a savings plan.
5. Adjust your plan as necessary.
6. Consider a side hustle.
7. Use budgeting tools.

Determine Your Goals

The first step in budgeting for big expenses is determining what you want to purchase. Whether it’s a home, a car, a vacation, or a new furniture set, make sure you’re clear on your goal.

Calculate The Cost

Once you know what you want to purchase, you’re ready to determine how much it will cost you. This will help you to understand how much money you need to save and how long it will take you to reach your goal.

Prioritize Your Expenses

Once you know how much money you need to save, you must prioritize your expenses. List your monthly expenses and see where you can cut back. Reducing your spending can free up more money for your big purchase.

If you have a partner or spouse, discuss this with them – you both must agree on where you can cut back!

Create A Savings Plan

Once you’re clear on your expenses, you’re ready to create a savings plan. First, determine how much money you can save each month. Then, set up an automatic transfer to a separate account, such as a high-interest savings account.

This will help you to build your savings and reach your goal. Automatic transfers make things much easier – you’re more likely to reach your savings goal if you just “set it and forget it!”

Adjust Your Plan As Necessary

As you progress towards your goal, be prepared to adjust your plan as needed. If you’re spending more than anticipated or unexpected expenses arise, you may need to adjust your savings plan.

If you’ve set up automatic transfers,  you can either decrease the amount you’re transferring or turn them off for a few weeks or months as necessary.

Consider a Side Hustle

In addition to reducing your expenses and saving money, you can consider a side hustle to help you reach your goal faster. Whether freelancing, selling products online, or starting a small business, a side hustle can provide additional income to help you reach your goal.

Use Budgeting Tools

Budgeting tools, such as budgeting apps or spreadsheets, can be a great way to track your spending and progress toward your goal. These tools can help you stay organized and focused on your goal, giving you a clear picture of your financial situation.

What’s Your Tip For Saving Up For Big Expenses?

Budgeting for big expenses requires careful planning, discipline, and persistence. What’s your tip on this subject? Let me know in the comments!

Today I’ll cover some stuff different from the usual personal finance tips! These are some decisions or actions that can impact your financial health:

• Who you marry or enter a long-term relationship with.
• Leave your credit cards at home if you’re an impulse shopper.
• Institute a “no-buy” month,

Your Relationships Can Have A Huge Impact On Your Financial Health

Who you marry or enter a long-term relationship with can enormously impact your financial health! Combining finances with someone who isn’t very good at managing money can affect your ability to plan for your future and save for it.

These are two actions you can take to help ensure money doesn’t become an issue in your relationship:

• Give each person a “fun” budget for every week or every month. This is money you can afford to spend without impacting your long-term financial health and can be spent any way you want.
• Have regular money “dates.” This is when you talk about how you’re doing financially as a couple, what you’re spending money on, and any changes you may need to make to your spending habits.

Leave Your Credit Cards At Home If You’re An Impulse Shopper

If you have impulse shopping issues, one way to help keep your shopping habits under control is to leave your credit cards at home! Yes, you can still pay with debit, but the limit tends to be lower, so you’ll spend less overall. Just don’t forget to bring cash along. Paying with cash seems more “real,” so you’ll think twice about buying things you don’t need.

If online shopping is an issue for you, make it as hard as possible for yourself. Delete your accounts, including your Paypal account. The more work you have to do to pay for something, the more likely you’ll think twice about buying it!

Institute A “No-Buy” Month

A “no-buy” month gives you a chance to take a refresher and take a good look at your spending habits. As you deal with holiday bills, January can be a great time to do this!

You can still buy items you need – like food, clothing, medicine, and hygiene products. However, you must put off buying anything you don’t need – for example, books, home decor, and cute trinkets – until the end of your “no-buy” month. Make a list of all the items you considered buying but didn’t to give yourself an insight into how much money you’ve saved by having a “no-buy” month.

What’s your unconventional personal finance tip?

Have you tried any of these? Do you have another tip I haven’t mentioned? Let me know in the comments!

Congratulations! You’ve reached the last step in your money management journey. That doesn’t mean you can spend whatever you want, whenever you want, though. It just means you should now have the mechanisms in place to keep you on sound financial footing.

So what do you mean by keep your spending limited?

The best way to keep your spending limited is to plan in advance. Going out grocery shopping? Then make a list and stick to it. Check for advertised specials so you can stock up – but only if it’s something you’ll use! Going out to eat? Then check the menu online and determine how much you’re willing to spend. And always take your leftovers home!

Keeping your spending limited doesn’t mean you can’t spend money ever – it just means you try to plan out in advance how you’ll spend it!

Won’t people think I’m cheap?

You may have some friends or family members who think you’re cheap because you don’t spend as much money as you possibly can.  But that’s fine.  Some of them will hopefully come along with you on your financial journey and be better for it, and some of them won’t and may have regrets in the long run. Either way, you’re responsible for your own financial freedom, and it doesn’t really matter what anyone else thinks.

Any other spending tips?

One of the good and bad things about being an adult is that there isn’t anyone to tell you what to do! When you were a kid, your parents could limit what they bought you and even how you spent your own money. But as an adult, you have free reign over how you spend your money.

So it just comes down to keeping track of how you’re spending money and making sure you’re making the most of your purchases. You don’t have to limit yourself to only the bare essentials in life but think long and hard about which “little pleasures” are the most important to you.

The Takeaway

The key to keeping on track with your spending is to plan as much of it in advance as possible. You don’t have to figure out to the penny in advance exactly how much you’re going to spend on groceries or a nice meal out, but it does help to go in with a rough idea of how much you can afford to spend. And remember that impressing other people isn’t more important than your financial security!

Congratulations! You’re really on a roll. You’ve got a budget, you’re investing, and you’ve even started planning for your retirement years.

If you haven’t started already, it’s time to get your credit card debt under control.

Why is it so important to get my credit card debt under control?

It’s important to get your credit card debt under control because you’re wasting money every month paying interest if you don’t pay off your balance in full.  Unlike car debt or a mortgage, you don’t have anything to show at the end of the day with credit card debt – you just owe credit card companies a lot of money!  As well, credit card interest rates tend to be much higher than interest rates on mortgages or credit card loans.

So how do I get started?

That depends on your personality. It’s best to start paying off the credit card with the highest rate. But if you’re the kind of person who needs a quick win to remain motivated, then it may be best to start paying off the the credit card with the lowest balance.  Either way, the key is just to throw any extra money you have at your credit card debt.

To learn more about different approaches to paying off debt, read my post on debt avalanche versus debt snowball.  There’s no one “right” approach as long as you’re paying off your debt!

Is there anything else I need to know about paying off my credit card debt?

Hopefully you’ve already slashed all unnecessary expenses, but if you find any while reviewing your credit card statements, now’s the time to cut them out. As well, you can pay off your credit card debt faster by switching to a low or no-interest credit card and then transferring over your balance to that card.

But it’s important that you read the fine print if you do a balance transfer as most low or no-interest credit cards tend to only stay that way for a limited amount of time. You also need to avoid running up your debt again, which can be tempting with a low or no-interest credit card.

The Takeaway

Credit cards can be great tools if you use them wisely. But they can also lead you down a path of overwhelming debt. So take a good look at your credit card statements, cut out unnecessary spending you see on them, and start paying off your balances!

While you may not actually write too many cheques these days, it’s still a good idea to have some kind of chequing account. After all, you need something to put your money in for everyday expenses!

Bank fees have definitely gone up over the years, so it can be harder, but not impossible to find a low-fee chequing account.

Determine what’s important to you

To make sure you get the right kind of chequing account for you, think about the following:

• Do you like being able to hit up the ATM as frequently?
• Do you pay people by e-transfer frequently?
• Do you use your debit card a lot to pay for things or are you more interested in paying by credit card?

All of these things are important to think about, as you don’t want to end up with a chequing account that charges you a fee every time you hit the ATM or make any e-transfer!

Shop around

You can go with two options when it comes to opening a chequing account – open one with an online bank or one with a brick-and-mortar bank.

If you go with an online bank, you are much more likely to be able to find a no or low-fee chequing account. The drawbacks are though that it may not offer as many options as a brick-and-mortar one would (e.g. e-transfers or paying your credit card easily).

With a brick-and-mortar bank, you may be able to find a no or low-free chequing account, but you’ll have to keep a reasonably high balance in order to avoid getting dinged with fees. You will likely be able to get more options for services included than you will with an online bank.  And with a brick-and-mortar bank, it’ll be easier to find ATMs, and online banks don’t tend to have very many!

So do a little research and see which option work for you.

Go Open Your Account

Now all you have to do is go open your account. Check ahead of time to make sure you have any paperwork or ID that may be required, and you’re good to go. Then take care of closing out your old account and be sure to move over any automated payments to your new account, so you don’t end up with unpaid bills.

The Takeaway

It can certainly be some work to find a new chequing account, but it’s well worth it and the savings will add up over time. Just take the time to do your research and find an account that suits both your budget and your needs!

So you’re doing really on your money management journey. You’ve done everything from making a budget to getting started on saving for retirement. So what’s next? Well, now it’s time to revisit your budget and see if there’s anywhere you can cut back.

How do I get started?

The easiest way to get started on cutting back on expenses is to take a good look at your budget. If you did your budget a while ago, you may want to review your last few credit card receipts or list of debit purchases. With most of us paying by “plastic” due to the pandemic, we’ve all got a pretty good record of when and where we’re spending all of our money! You may be surprised at how much you’re spending on some areas. For me, it’s always a shock how much we spend on food – whether that’s groceries or take out!

Do I really have to cut back on expenses?

This is up to you. Unless you’re in a real budget crunch, you definitely shouldn’t cut out all of life’s little pleasures! With being stuck at home more and limited options for socializing, for a lot of us streaming services and snacks are one of the few things we can rely on! The key is just to be sure you’re getting pleasure out of the little extras you’re spending your money on.  A few options for cutting back on expenses without getting rid of everything you enjoy is:

• If you enjoy takeout, look at less expensive options or getting takeout less often. Try picking up your takeout instead of using Door Dash or another delivery service.
• Be sure you’re really using all your streaming services. How much time do you truly have to watch them? If you’ve got four or five services, you may be able to cut back on a one or two. At worst, you save money for a few months and then sign back up again when you have more time!
• Purchases you have on auto ship. Auto ship is so convenient – stuff just shows up at your house on a regularly scheduled basis. But if you have more of a product than you truly need or just aren’t using it much any more, then it may be time to cancel or pause the auto ship.

Will this really make a difference?

Yes, it really will make a difference. Say for example, you do one less takeout a month, and one less streaming services, for a savings of 50 dollars a month. That adds up to 600 dollars a year. It may not seem like much, but every little bit helps when you’re saving for your future! You can use that money for everything from an emergency fund to a nice night away!

The Takeaway

Cutting back on your expenses is an important step on your money management trip! It doesn’t mean you have to give up everything in life that makes you happy – it just means you’re not spending money on things you don’t need or don’t use!