Approximately 78% of Canadians are in debt and the average debt is $28,000 – that’s EXCLUDING mortgage debt! What’s happening? What’s going on that we aren’t living within our means?
Well, for starters, we’re not connected or in reality with what our “means” are.
Many of us walk around mindlessly spending and unclear as to what we can afford. We see things we want and we purchase them by means of credit, unsure as to how we will cover the arrival of the inevitable monthly billing statement.
I think most of us have done it at some point in our life, unless we were raised and taught at a very early age how to create and following a budget plan. The reality is that most of us were not taught how to manage our money, and so we do not engage in one of the most important activities: tracking our spending.
During my 13 years as a financial advisor, one of the most frequently used statements I hear is “I honestly don’t know where my money is going?!”
Understand why and where your money is being spent
This is one of the core issues that needs to be addressed. Many people think that their financial woes will be alleviated by moving to another city where the cost of living is lower, or simply by making more money. Changing where you live or increasing your income may not be the answer; and usually isn’t’. There’s an old adage: “If you can’t manage a little, you can’t manage a lot”. A large component of financial success is a matter of understanding why and where your money is being spent.
The great news is that you can take action on this right now. You have the ability to take control of your financial situation without making more money, or even moving cities (phew!) – you just need to have a thorough understanding of your money.
Track every dollar that comes in and every dollar that goes out. Income must be greater than expenses. Seems simple, right? Well, it is.
Follow these 5 steps and take control of your finances:
Have a spending tracker on your phone and input every dollar you spend. You can contact me to find out more about choosing one. Connect with the number when you type it in, really educate yourself on every dollar that is going out.
Do number 1 daily. Don’t fall behind. Set a goal – do it for 30 days in a row. Build your “money tracking” muscle. You will be amazed at how good it starts to feel once it becomes a daily habit
Write down your monthly and annual income as follows:
- Gross Income
- Net Income (after income tax and expenses have been factored in)
Write down your monthly fixed expenses. Then subtract that number from #3 (monthly net income), and you will either have a shortfall or surplus. Write down that monthly amount.
Make steps 1-4 fun. Enjoy the process!
You may fail before the 30 days is up. It’s ok, many of us do, the trick is to keep trying and to not give up until you hit that 30 day mark. You will be amazed at what you learn in this process. At the end, you will have a new awareness you didn’t have before, you have a greater connection to each dollar you spend. You will know if you can afford something and will have more confidence in your spending patterns/habits/decisions.
I have created a user friendly budget tracking spreadsheet that I would be happy to share with the Elletourage readers. Please email me at info@capitalcorefinancial for more!
This blog post was written by Marissa Cepelinski
Marissa is a passionate and highly driven leader with over 12 years of experience in the field of finance. As Co-Founder of Capital Core Financial, Marissa helps her clients overcome their emotional limitations around money, and guides them towards a path to sustainable wealth. With a company goal to redirect one billion dollars from CRA to the non-profit, Marissa is on a mission to help people implement charitable giving into their financial plan. Marissa sits on the board for A Better Life Foundation, a non-profit providing food security, education and employment training in Vancouver’s Downtown Eastside, and also involved abroad, sitting on the board for Run For Water and One Girl Can, helping raise funds for clean water projects in Ethiopia, and helping fund education and scholarships for girls in Africa.