Almost half of all Canadians are living paycheck-to-paycheck. They’re struggling to get their finances under control with the rising costs of everything. Can you relate?
While there’s nothing that you can do about inflation and the rising cost of living, you can take steps to control your own personal finances. You can start by correcting some common financial mistakes.
Read on to learn all about the top money mistakes that people make as well as some financial tips to fix them.
1. Not Having a Food Budget
We all know that budgeting is important, but many people only think of budgets when it comes to fun things. They know that they have to budget for things like vacations, concerts, games, and other non-necessities, but for whatever reason, their budgeting know-how goes out the window when it’s time to eat.
We recommend tracking the amount of money that you spend on food every month. Track every purchase (even snacks and your occasional cup of takeout coffee) and try to avoid changing your normal habits just yet.
How much money are you spending?
Let’s say that you think you only spend $50 per week on groceries. You know your normal grocery shop has you spending $40 and you stop back into the store to pick up a snack every now and again.
After tracking, you may find that you’re spending more money than you thought. When you add up those snack trips, how much are they actually costing you?
A few dollars here and there doesn’t seem like a big deal, but it adds up!
You should also consider your eating out budget, not just your grocery budget. Almost 50% of Canadians plan on continuing to order food on expensive delivery apps at least once per week. That adds up too!
Make a budget and stick with it. Start looking for discounted foods. Find grocery stores with loyalty plans and coupons and start shopping there instead.
We also recommend meal planning. It’s a great way to eat healthier and stop wasting money on excess food.
2. Not Putting Away Money Regularly
One of the best pieces of money advice that anyone can give you is to start putting away at least a few dollars from every paycheck (preferably more, but you should do what your budget allows).
Let’s say you start putting away $100 from every weekly paycheck. If you were to do that every week for twenty years, you’d have over $100,000. This is if it’s in a normal savings account (or a safe, or a hidden trunk in your backyard—wherever you put your money).
If you invest that money in safe, slow, and steady stocks, that money will grow even more.
You don’t have to put away $100 per week to start seeing benefits. Put away as much as you can without interfering with the rest of your budget.
Some weeks that may mean you put aside almost nothing. On other weeks, you may put in double your normal amount. Something is always better than nothing.
3. Not Setting Financial Goals
Many people know that they want to save money, but the idea of that is vague. They’re not sure why they’re saving. They may have a savings account, but what does that really mean?
We recommend having several financial goals that you can work toward. This will help you stay on track (if you know what’s at the end of the tunnel, you’ll feel more motivated to reach it).
Some of these goals may be large, but others will seem more attainable.
For example, if you already feel financially stable, you may want a small goal of a vacation fund. You have a trip to another country planned within the next year, and you need a certain amount of money for flight tickets and accommodation.
Then you’ll have larger money goals. If you’re trying to buy a house or set yourself up for retirement, these goals are going to be harder to reach, but also more important.
By knowing your goals, you’re “gamifying” saving and giving yourself a better idea of how much money you should be setting aside every paycheck.
4. Not Considering a Second Stream of Income
If you’re not already making enough money with your current job, a second stream of income can make a big difference, even if it’s only adding a small amount of money per day.
Let’s say that you find a side gig that pays you $100 per week. That $100 doesn’t sound like a lot, but at the end of the year, it’s $5,200. It can pay for your weekly gas or groceries or you can add it to your savings.
Second streams of income don’t have to be difficult. You could work for a rideshare company, deliver food, or even do odd jobs around the neighbourhood.
If you have any special skills, you may be able to find low-effort freelance work online that allows you to work from home.
5. Not Prioritizing Debt
One of the best things you can do for your overall financial health is to get out of debt as soon as possible.
Your debt accrues interest over time. That means that the longer you put off paying it, the more money you’re going to lose. As good of an idea as investing is, you should avoid investing a lot of money until your debts are paid off.
One of the biggest financial mistakes that people make is to put themselves deeper into debt in an effort to get ahead. They may take out loans to get expensive cars or money for investments when in reality, they’re better off keeping their debts low.
This doesn’t mean that taking out loans is a bad idea. It means that long-term loans that you’re struggling to pay off should take first priority, especially if they’re high-interest.
Take Our Financial Tips and Avoid These Money Mistakes
When you’re responsible for financial decision making for the first time, it’s easy to make newbie money mistakes. Luckily, these mistakes are easy to recover from if you catch them early.
Set yourself up for a better financial future with our financial tips and avoid these common money mistakes.
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