Everyone needs to be challenged once in a while, especially when it comes to their personal finances.
If you find yourself running out of money at the end of the month or notice you’re spending too much on certain items, here are some personal finance challenges you can do:
1. Keep track of all of your spending
Remember that coffee you bought yesterday? What about the gum or chocolate bar you didn’t intend to buy at the grocery store? Or the cab you took to get to the movie on time? Force yourself to track every single cent you spend, no matter how small. After a month or two, you may be surprised how much money you’re wasting on certain things. You can use pen and paper or an app such as Mint to monitor your spending.
2. Stop eating out
In 2015, the average Canadian household spent $8,629 on food—$2,502 of which was spent on restaurant meals and beverages or nearly 30% of their total food spending. If you cook at home or bring your lunch to work, you can save a small fortune. Get in the habit of making your lunch the night before or eating leftovers. Try doing this for a month and your savings account balance should be a little higher.
3. Cut back on shopping
If you really want to see a difference in your spending habits, force yourself to stop shopping. Grocery shopping is fine, but all other shopping should be halted. That means no more online shopping and no more trips to the mall. Even if that jacket you’ve been eyeing for months goes on sale, don’t buy it. You’ll be amazed at how much you save if you stop buying stuff. Material things won’t buy you happiness, but a lot more money in your RRSP or TFSA might bring a bigger smile to your face.
4. Pay down debt
Most Canadians carry have debt. A TransUnion report found the average Canadian had a non-mortgage debt balance of $22,154 in the second quarter of 2017. That’s a 2.7% increase. The interest rate on non-mortgage can vary from perhaps as low as 7% a year for an unsecured line of credit to about 20% for a rewards credit card. With interest rates rising, the rate on lines of credit and some loans will also increase—making the cost of borrowing even higher. The interest rate on non-mortgage debt is often higher than what most investments will earn so it’s better to pay off debt instead of putting money into a high-interest savings account (HISA).
5. Save automatically
Have you ever tried saving whatever money’s left over in your bank account at the end of the month? Sometimes you have a few hundred dollars and sometimes you have almost nothing. That strategy is doomed to fail if it’s the latter. The best way to save money is to create an automatic savings plan. You can automatically transfer a set amount to another account every week or every month. By doing this, you won’t have the chance to spend money that’s no longer easily accessible—especially if it’s in an RRSP. An automatic savings plan will help you save more money. And as your salary increases, so should the amount you save.