March 2, 2014 by Erin C
Everyone needs money. No one really knows how much is enough but the truth is, everyone can use a little more. Even just a little extra cash at the end of the month sometimes can mean the difference between being able to pay off a student loan, save for a trip, have an amazing experience or even buy your first property.
So here are my TOP 10 SMART MONEY TIPS to help ensure you have the little extra you need to help kick some of those items off your bucket list:
1. Get Real About Where You Stand Financially
You can’t ever get smart about money until you know where you stand. Don’t stick your head in the sand. It can be complicated and down-right painful to understand sometimes but there are tons of resources out there to help you. First, just go into your main bank branch and ask to talk with an account manager. They are a great resource for understanding where you are at. Also, there are many women-supporting-women resources cropping up like Women and Money. Get connected to your local branch and get educated on money issues and options in a supportive and nurturing environment. You can also try credit counsellors who can help build plans for you to consolidate your debt and make your payments manageable. A popular and recommended resource in BC is the Credit Counselling Society.
- Find out exactly how much you make (gross) and how much you take home.
- Find out exactly what you owe and to whom.
- Find out what percentage of interest you are paying on all of your debts. (credit cards can be over 20% at times! Crazy!)
- Find out how long it will pay off your debt and under what circumstances.
- Find out more about what you have invested (retirement savings, pension, etc.) and how it is invested (short term? long term? high risk? low?). Make sure what you have put away is being invested in a way that makes sense to you.
- Find out what insurance coverage you have and make a purposeful decision about whether it is enough for you and your family circumstances or not.
2. Track your Spending
After taking stock of what’s coming in and your debt, you need to find out where your money is going each month. It won’t normally be exactly the same every month but I guarantee you that after two months of tracking everything you spend, you’ll be surprised. I find it’s easiest to track my spending on my smart phone since it’s always on me and I’m really loving the app Easy Money – Money Manager right now (which is Android friendly).
3. Get Real About Your Lifestyle
From just talking to my mommy friends, I can’t tell you how many times I hear women doing whatever it takes to maintain a lifestyle they had at their best (and most free) financial position. Life is unpredictable and not always a straight line from A to B. It may necessitate at times a scaling back of spending if income has been compromised in some ways or you’ve been hit with some extra ongoing expenses. If you are going to be money smart, you have to get real about whether you can really afford this lifestyle you are shelling out for or whether it’s time to clip the coupons and do your own manicures. Find out. Be brave and don’t worry… nothing is forever. Just be real about what you can afford at this point in your life and avoid digging yourself a massive debt hole for the sake of pride and really nice purses.
4. Set up a Budget
Now that you are really in the know about what is coming in and going out set up a realistic budget that you can follow. Make some hard decisions if you really need all the things you throw money at each month and build a budget that will work for you. Continue to track each month where your money is going and create a new budget anytime your finances permanently change (buy a new car, new baby, change in income or residence, etc.)
5.Set Up an Auto-Save Plan
Have you ever heard the phrase “pay yourself first“? What that means is that no matter what debt you have you should first take whatever you can afford and put it directly into a saving account with an auto transfer system so you have no choice about it and in fact, you forget about it. If you choose to pay your debt first, there will always be more and you will get caught in this get in debt – pay it off cycle. You’ll never have any real money in the bank. Get on an auto save program and start a smart debt pay off system so that paying off debt and building savings are two separate things. I like ING Direct because it’s not a store front operation and they have some great savings tracking tools. Plus, there is a bit of a lag when you want to take the money out so it makes you think a little bit before tapping into that hard earned account.
6. Use the “Snowball” Approach to Paying Off Debt
I learned this trick from a hilarious lady on a Canadian TV show name Gail Vaz-Oxlade. She’s a straight talking lady that is an excellent resource for understanding your money. I love her book “Debt-Free Forever” in which I picked up this tip. The idea is that instead of spreading out what you can pay over 3 or 4+ debts equally you pay the minimum on all debts and then you pay everything you got left toward the debt with the highest interest rate (not the largest amount). The debt with the highest interest rate is costing you the most money every month so gang up on it and annihilate it! Then you systematically pick off each debt one by one. Once the debt with the highest interest rate is paid off, you take everything you were paying to that one and throw it at the one with the next highest interest rate – hence snowballing.
7. Protect Yourself
Everything can go sideways in a second. It doesn’t always but it does for enough people that you have to be smart about the chances of you being hurt, injured permanently or even killed. Do you have dependents? Even more reason to make sure you have the insurance coverage you need just in case. Needless to say you should also have a will set up especially if children are involved. There are tons of resources (like Canadian Legal Wills) to do this cheaply but the peace of mind you get from having these things in place will be priceless.
8. Carry Cash
Another golden tip from Gail is to get used to carrying cash. It’s SO mush harder to spend…not on little things perhaps… but on big purchases that can really throw a budget if you’re not careful. Gail suggests creating a set of jars for each category of variable spending, gas…gifts… toiletries…etc. That way, if you don’t have the cash from the jar to make a purchase then you need to stop and wait until you have it. This has stopped me many-a-time from blowing $80 on random beauty purchases at the drug store that I didn’t need. I have a budget of $20/month for toiletries and I bring that with me when I have something specific that I know I need to buy more of or something specific I want to try.
9. Slow Down
Marketers depend on you and your impulses to purchase things that are shiny and pretty (did you see my example above? I’m a sucker for beauty products). Of course, knowing this is half the battle. So? Slow down. If you fall in love with something (doesn’t really matter what it is) give yourself a probationary period – 2 days? a week? a month? and then see if you feel the same way.
10. Side Hustle
The key to having more money? Sometimes it actually comes down to MAKING MORE MONEY. A side hustle is a hobby or interest that you can parlay into some extra income at the end of the month. I follow this blog called Budgets are Sexy and it has this amazing series called Side Hustle. Such great inspiration for making more from what you have. It might be blogging, personal training, cake decorating or waitressing on your off days. Whatever it is, if you want to be out of debt enough or you want your dream wedding or to buy your own place enough then you’ll do what it takes. Right? Be creative! Turn what you love into a little money making machine on the side.
Do you have a side hustle? Tell me about it in the comments! 🙂