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Member Advice for Life
7 simple ways to improve your finances
Improving your financial situation won’t happen overnight and requires behavioural changes, patience and time. Here are seven ways you can improve your finances.
How can I improve my finances? A question many of us often ask ourselves. The answer? This lies somewhere between our intentions and the actions, we take. We’re all guilty of it – saying this is going to be the day, the month, the year where we spend less and save more. But the truth is, we often don’t live up to that. Why? It’s simple, our intentions don’t match our actions – we don’t actually take the steps (actions) to make the change and continue to tell ourselves tomorrow will be a new day.
Often the reasons for not taking action is because we don’t have the resources, knowledge or mindset to make the change. Here are 7 simple tips to help you bridge that gap:
1. Stop making excuses
Often, we use excuses as a crutch to get out of doing something – especially when we’re running late or don’t want to go to the gym! This is often also the case when it comes to being in control of our finances. Saying things such as, “banking is too confusing” or “I don’t know where to start.”
The first step to improving your finances is to stop making excuses. If you’re unsure where to start or think it’s too confusing, reach out to your Financial Advisor to start the conversation and set goals. Further your knowledge by challenging yourself weekly to learn about a new financial topic – you can find many resources at your local library, online and don’t forget about our Money Advice for Life blog!
2. Set limits on your purchases
Purchases have become very thoughtless in today’s world – it’s as simple as a quick tap of your card. Although this has many advantages, it also makes it very easy to lose track of how much you are spending.
By creating a budget and setting spending limits, you can stay in control of your spending. For example, if you eat out often, set a goal to only eat out twice this month. By doing this, it becomes something you can keep yourself accountable to – tip: tell a friend or take on this challenge with someone else, this way you can support each other and help each other be accountable.
3. Set savings goals
Setting saving goals is soooo important! If you don’t know what or why you are saving it can become very easy to give in to temptations and spend money. By having a goal in mind, you feel as though you are working towards something and gives you that sense of accomplishment once you achieve it.
Here are some simple goals to help you get started: saving for a planned vacation, having enough money to cover 3 months expenses, and saving 10% a month at least once a quarter. A good tip to help you follow through – automate your savings.
4. Pay off debt
Debt happens, and almost everyone carries some level of debt – but learning to manage it is important. Only take on debt that you can manage, and set expectations on how you’ll build debt payments into your budget.
Remember it’s a marathon, not a sprint. Here is a great read on success habits for paying off debt.
5. Think long-term
Don’t let your short-term thinking, undermine your long-term success.
Short-term goals are great. They are often what help kick start you into improving your financial situation because you can see the light at the end of the tunnel. However, if you only make short-term decisions, you might be hurting your long-term success.
Create long-term goals for your future such as saving for retirement, and then set short-term goals (milestones) to help you reach these long-term goals – for example, placing $50/month into your child’s RESP and $50/month into an RRSP. Doing so, helps you to stay motivated as you’ll be continually working at and achieving your smaller goals, all while working towards your long-term goals.
6. Be realistic
Improving your financial situation isn’t going to happen overnight, similar to how it’s unlikely to lose 10 pounds overnight (unless you have a really nasty flu, which is a whole other conversation). Having this type of mindset is only going to set you up for failure. Creating habits and working at it over time is what will set you up for success.
Part of being realistic is giving yourself allowances. Improving your financial situation doesn’t mean your life is over. You can still spend money on a night out with friends or go to the movies – the difference is how you plan for it such as building it into your budget. Setting aside “fun money” can be a great tactic for allowing yourself to still have fun, while sticking to your budget.
There’s no-one-size-fits all solution when it comes to your money. Everyone’s situation is different and what works for one person may not work for another. Finding what works best for you is going to ensure you are successful.
What does that mean? Try different savings tactics such as automatic savings or spending challenges. A couple of tactics that work well for me is having “no spend months” and setting short term goals that will help me reach my long-term goals.
We all have the power to improve our financial well-being, the question is, are we going to act on it? This Tedx Talk on 3 psychological tricks to help you save money, highlights that what we all really might need is just a change in perspective.
What are some ways you’ve been able to improve your finances? I am always up for trying new tricks – share with me by commenting below!