Tips to managing your cash-flow

If your spending habits are out of control, or you’re just spending money too easily, it’s something many Canadians can relate to.

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According to a survey on debt, over half of Canadians live from paycheque to paycheque, while debt is overwhelming for a quarter of Canadians. And a government survey reveals that almost one-third of Canadians have no retirement savings.

Spending money too easily and getting entrenched in bad spending habits are two of the most frequent ways that lead to higher debts and lower savings. However, there are steps you can take to reverse the trend and get into good spending habits. We outline 10 ways to rein in your spending so you can take control of your debt and grow your savings.

1. Start by making a budget 

It’s difficult to get a grip on your spending without a budget. It allows you to get a full picture of how much you’ve got coming in, how much you spend on essentials and what’s left over. Budgeting apps have made this process really easy, and some of them, like Mint and Wallet are free to download. Other budgeting apps, like YNAB and Pocketsmith charge a (fairly low) fee, but offer more extensive features, including links to your accounts and financial forecasting. Having a solid budget in place also makes many of the other steps we recommend much easier.

2. Analyze your spending

Most budgeting apps track spending, so you know exactly where your money’s going. An expense tracker can also allow you to pinpoint where you’re effectively wasting money (spending on unnecessary items), and you may be amazed to see how much these small amounts can add up to over a month. 

3. Cut back on unnecessary expenses

Once you’ve analyzed your spending habits, you’ll know exactly where you’re needlessly spending money. You can then make a plan to stop wasting that money. For example, avoid the places where you’ve been spending money frivolously and take coffee, snacks and meals with you whenever you go out. You’ll be amazed at how much this will lower your spending.

4. Reduce the costs of your recurring expenses

It’s time to negotiate. Depending on where you live, many recurring expenses can be negotiated – cable, your landline and cell phone, insurance and even your mortgage. Talk to competitors and see what deals they’ll offer you to switch. Many provinces have several utilities providers, so hunt around for a better deal. Consider getting rid of cable and your landline and switch to your cell phone and streaming services. This alone could save you hundreds of dollars every year. 

5. Lower your grocery bills

Simply by avoiding going into a grocery store (by using delivery or curbside pick-up) you can save a considerable amount in excess spending. How many times have you gone shopping and popped something in your cart that wasn’t in your groceries budget? If you only order what you need, that’s all you’ll spend. Also, be vigilant in checking out flyers and, if possible, shop at stores that offer price matching. Also, sign up for rewards programs —these can all reduce your groceries budget. Using an expense tracker can help you see the difference in your grocery spending before and after you follow this tip.

6. Deliver yourself from temptation

Impulse-buying will mess up any budget. You can avoid temptation by always having a shopping list and resolving to never stray from it, no matter how great that bargain is. Try this: if you find an item that you feel you must have, don’t buy it straight away. Give it 24 hours so you have time to really consider if it’s as essential as you first thought. Along the same lines, try to avoid the mall, it is the home of wasting money. And if you absolutely have to go there, head straight to the store that has the item you absolutely need and have budgeted for, then head straight back to the car.

7. Try a no-spend challenge

This is where you promise to spend no money for a set period of time (a day, a week or a month). It can either be that you spend no money at all or just no money on certain items (such as non-essentials). This can be great exercise to break bad spending habits. No-spend challenges really help you realize how many things you habitually buy that aren’t necessary. To make this really effective, take notes of your savings, so you end up with a tally of how much you saved and on what. This will give you great insight into your spending habits.  

8. Review your subscriptions

Have a look at your subscriptions and see which ones you actually need. If you rarely go to the gym or never read those magazines, cancel them. You can always follow free YouTube workouts at home, and many magazine articles are available free online. 

9. Put your credit card in a drawer

Credit cards can be a gateway to spending money you don’t have. They can enable some really bad spending habits because they allow you to ignore your budget and continue spending after you’ve gone through your paycheque. This one technique can prevent you from spending money: leave your credit card in a drawer and only use it when you have to (such as when ordering essential items online). Take this a step further and leave your debit card at home if your trip shouldn’t involve spending money — for example when going for a walk. If you’ve no cash or cards with you, popping into a coffee shop for a drink and a muffin won’t be an option. 

10. Always ask these questions before buying anything

Do you actually need it (rather than just want it)? Have you budgeted for it? Have you shopped around? If you answer no to any of these, don’t buy it. If you can’t resist buying it, try and find something you no longer use, sell it and put that money towards the new item. 

How to start spending money more wisely

While you can take any of these steps by yourself, having help can make a big difference. An IG advisor can help you set a budget, lower your debts and save for your future. Contact one today to find out more.