Source: Alexandra Talty, Forbes, September 29, 2014
Fall has started, and for many, it is time to put your nose to the grindstone at work. The next few months are the perfect time to reset your wallet and focus on your long-term financial goals, ahead of the Christmas shopping season, when restraint and moderation tend to disappear.
Save Early and Save Often.
Set up a monthly, automatic transfer from your chequing account into your investments. This makes saving automatic and turns it into a habit. Start off by saving 10% of your gross income, then gradually increase it to 20%.
Keep Track of Spending.
This sounds great, but if you are living paycheque to paycheque, putting aside savings every month may seem like a stretch. Don’t be discouraged. Take a look at where your dollars are going, and chances are, you will be able to save some money. The most important thing you can do is to start tracking your spending and income. I know many people who make plenty of money and pay the bills and everything is fine, but they really don’t know how much they are spending on items like dining out, groceries, utilities, coffee and hobbies.
Tracking your spending requires commitment on your part. Using apps on your smart phone can certainly make it easier. If you don’t have a smart phone, use your credit card and bank statements to track your expenditures for a few months. Or, you can always use the tried-and-true method of keeping receipts, budgeting, and posting your data to an Excel spreadsheet.
Make Budgeting a Habit.
If you don’t take the initiative to do it, it won’t happen. Recurring expenses, no matter what they are, add up. Gym memberships, magazine subscriptions, getting your hair and nails done twice a month – all these little things add up in the long run. All I’m suggesting is that you start to keep track of these small purchases. The process can be a real eye-opener and it will show you where your non-existent savings are going.
Make Small Changes.
Look for little ways to dial back your spending. The key is to focus on small things that you can do, so that you don’t feel like you can’t spend at all. Sometimes changing how you do things can save you a lot of money. If you enjoy going out for a meal with friends, but find the cost is preventing you from saving money, host a potluck at your house. Supply the main dish, and ask everyone to bring a beverage or side of their choice. When it comes to saving, getting creative can really pay off.