budget Archives - Ellen MCKAY

June 1, 2023 Debt

How To Live Debt-Free!

You may be thinking that living debt-free is impossible! And it’s not easy, but it’s well worth it, as living debt-free can bring a sense of financial stability and freedom to your life.

These are the vital steps you need to take to move towards living a debt-free life:

Create a budget.
Pay off debt.
Stop accruing new debt!
Live below your means.
Build an emergency fund.
Invest in your future.

Create a Budget

One of the most critical steps in living debt-free is creating a budget. A budget will help you track your income and expenses, so you can identify areas where you can cut back and save money.

List all your fixed expenses (rent or mortgage payment, car payments, utilities, etc.), then your variable expenses (shopping, dining out, etc.). From there, determine how much money you have left over and see if there’s anything you can cut back on. This may seem like a lot of work, but you can quickly find all this information from your online banking portal.

Pay Off Debt

If you have debt, pay it off as soon as possible. Start by paying off high-interest (credit card) debt first, as this type can quickly spiral out of control. Once you’ve paid off high-interest debt, pay off other debts, such as student or car loans.

Not sure how much debt you have or what it’s costing you? Make a spreadsheet that lists all your debts and their interest rates.

Stop Accruing New Debt

Once you’ve paid off your debt, avoiding accruing new debt is essential. This means only making purchases you can pay for in cash or with a debit card.

You may want to consider using credit cards for everyday purchases and only use them for emergencies or large purchases that you can pay off monthly. However, if you’re good at paying off your balance every month and earn points or cash back on your credit card, using your credit cards regularly should be fine.

Build an Emergency Fund

An emergency fund can help you avoid accruing new debt when unexpected expenses arise. Start by saving a small amount each month, and over time, build up your emergency fund to at least three to six months’ worth of expenses.

Live Below Your Means

Living below your means means spending less money than you earn, which can help you save money and reduce your risk of accruing debt. Look for ways to reduce expenses, such as reducing your monthly bills, cooking at home instead of eating out, and shopping for deals.

Be mindful of your spending and avoid impulsive purchases. Ask yourself if each purchase is necessary and if you can afford it. If you can’t afford it, wait until you can.

Invest in Your Future

Once you’ve paid off your debt and built up your emergency fund, invest in your future. The earlier you start investing, the more time your money has to grow, which can help you achieve your financial goals.

I suggest you start with a Tax-Free Savings Account (TFSA). You can take your money out at any time without penalty and never pay taxes on withdrawals or any gains you make in the account.

Conclusion

Living debt-free requires discipline and a focus on spending and saving, but it’s well worth it! You can achieve financial stability and freedom by living debt-free with patience and persistence.

What’s your best tip towards being debt-free? Tell me in the comments!

December 1, 2022 Holidays

My Top Tips For Saving Money This Christmas

Looking to save some money this Christmas? I’m here to help!

It’s the holiday season, so it’s time to start thinking about gift-giving and holiday expenses. Like many people, you’re likely feeling a little overwhelmed by the cost of the holidays. But don’t worry – with some planning and innovative budgeting; you can have a joyous and affordable holiday season!

Set a budget.
Start shopping.
Book travel early.
Look for innovative ways to save money.

Set A Budget

First things first: it’s essential to set a budget for your holiday expenses. Determine how much you can spend on gifts, travel, decorations, and other holiday-related expenses. Don’t forget to include any ongoing expenses in your budget, such as your monthly bills. This will help you avoid overspending and have enough money to cover your expenses.

Start Shopping

Once you’ve set a budget, it’s time to start shopping. Look for sales and coupons to save money on gifts and holiday items. Consider making your gifts or decorations instead of buying them – this can be a budget-friendly way to add a personal touch to the holidays. Don’t go overboard; you could spend more on making gifts than buying them!

Another tip is to be strategic with your gift-giving. Set gift limits to reduce the amount of money you spend on gifts. You can also consider giving experiences instead of physical gifts, such as concert tickets or a cooking class certificate.

Book Travel Early

Book your travel as early as possible to get the best deals if you’re travelling for the holidays. Look for sales on flights, hotels, and rental cars, and consider alternative modes of transportation, such as taking the bus or train instead of flying.

Look For Innovative Ways To Save Money

Another way to save money during the holidays is to be mindful of your energy usage. Turn off lights and unplug electronics when they’re not in use to save on your electricity bill. Potluck is a great way to save you time and hassle and cut down on food costs.

And start planning early for next year! You can buy decorations and gift bags, and wrapping on sale after Christmas – and save a lot of money on big-ticket items such as artificial trees and outside decorations by buying them as part of Boxing Day sales!

What’s Your Best Money-Saving Christmas Tip?

Whether it’s planning a budget-friendly Christmas diner, creative gift-giving, or putting off travel til it’s less expensive, let me know what your best money-saving Christmas tip is in the comments!

June 15, 2022 Good money habits

Four reasons your budget may not be working

Have you finally put a budget together but found yourself unable to stick to it? You’re not alone! If you can’t stick to your budget, you may feel frustrated and wonder why you put the time and effort into creating a budget.

We’ll explain four of the reasons your budget may not be working and how you can adjust your budget to make it work better for you:

Your budget is unrealistic.
You’re not truly committed to living on a budget.
You haven’t left any money in your budget for fun.
You don’t have anything put aside for an emergency.

Your Budget Is Unrealistic

One of the most common reasons a budget fails is that it’s unrealistic. You may not have allotted enough in areas such as groceries (you can only cut back so much!), or you may have allotted too much for debt repayment. Yes, you really can allot too much for debt repayment if you’re trying to pay off debt too aggressively.

The key to success with a budget is moderation. That means you try to save more than you have been and spend less than you have been without sacrificing everything in life that gives you comfort or pleasure. It’s more important to have a budget you can stick to than pay off debt aggressively for a few months and then give up.

You Aren’t Really Committed To Living On A Budget

Another reason your budget may not work for you is that you’re just not committed to living on a budget. Or perhaps you are, but your partner isn’t. If this sounds like you (or your partner), then the best thing you can do is change how you feel about a budget.

Many people think a budget means restricting yourself and having to count every penny (or nickel, as we no longer have penny coins in Canada!). However, a budget is actually freedom. Once you know what you have to allot to fixed expenses (such as your mortgage or rent), you have the freedom to allot the rest of your money any way you want!

You Haven’t Left Any Money In Your Budget For Fun

Yes, you can still have fun even if you’re living on a budget! There are certainly lots of ways you can have fun with little or no cost, such as:

Going for a walk or attending a free festival.
Downloading books from the library – you don’t even have to leave your house!
Borrowing DVDs from friends or making better use of the streaming subscriptions you already have.

By doing things like this, you’re freeing up money to spend in other ways. So instead of buying four books a month, you buy one. Or you buy a fancy coffee during your walks once a month, instead of once a week.

You Don’t Have Anything Put Aside For An Emergency

Nothing throws off a budget like an emergency, whether it’s a roof leak or a job loss. That’s why it’s so important to have an emergency fund. So how can you get back on track after an emergency?

The best thing you can do is look at your budget and see where you may need to make changes. Whether that’s allocating more to your emergency fund or taking on a second job, you’ll have to redo your budget to reflect your new reality.

Have you ever used a budget?

Tell me about your success stories or where you got stuck in the comments below!

April 15, 2021 Good money habits

Create a monthly budget

One of the first steps in taking control of your money is to put together a monthly budget. A budget can help you save money and get a handle on your expenses.

Your budget should be broken up into the following sections:

Fixed costs
Short-term savings
Long-term savings
Fun money!

Fixed Costs

Your fixed costs are amounts that don’t change from month-to-month such as your mortgage or rent, a car loan, and your cell phone bill.

Other costs vary each month but will generally average out to be the same, such as your grocery bills and utilities. If you’re looking for somewhere to save on fixed costs, groceries are one of the few areas of you can you have a little wiggle room.

Fixed costs will likely take up to 50 to 60 percent of your income.

Short-Term Savings

Short-term savings are exactly what they sound like – money you’re putting aside to cover big expenses shortly. This money can be used to cover everything from vacations to a new laptop. The key is that they are an extra item you want or need, and you should save up for them.

Not expecting to make any major purchases in the next few months? That’s great – but it doesn’t mean you should avoid putting money into short-term savings. Any money you don’t use for expected purchases can be used to help build your emergency fund in case you suddenly lose your source of income.

For short-term savings, you should be putting aside 5 to 10 percent of your income.

Long-Term Savings

Long-term savings are the opposite of short-term savings – this is money that you’re putting aside for the future. Whether that’s a down payment for your house, your retirement, or your children’s education, it’s important to make sure you put aside money for your long-term goals.

It can be easy to let this part of your savings go, as the goal and rewards aren’t immediate. But unless you have a real financial crisis, it’s important to make sure you save up for your long-term goals.

Long-term savings should be 10 percent of your income.

Fun Money!

Now we get to the fun part. Part of the reason we like to earn money is that it buys us things we enjoy! Whether that’s dining out, getting the latest video game, or buying some new clothes, it’s important to spend some of your hard-earned money on something pleasurable.

Spending money on things you enjoy shouldn’t be seen as a luxury but as a necessary investment in your physical and mental well-being.

You can spend anywhere between 20 to 35 percent of your income on the fun stuff. This is an area where you definitely have some wiggle room, so if you end up with an unexpected expense or want to boost your savings, you can temporarily cut back in this area.

The Takeaway

Having a budget may seem constraining, but it really isn’t. Having set percentages to spend your money on, you actually give yourself the freedom to spend money on something pleasurable without feeling guilty! And you know that you’re still saving money for your long and short-term goals.

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