The median income in Canada hovers around $67,000 annually. That’s a number that, in theory, can afford someone a relatively decent quality of life. Of course, like most things to do with economics, things aren’t always as peachy as they appear.
Like many countries, Canada has experienced a severe hike in inflation recently. That inflation has, in turn, driven up prices on consumer goods and forced many people to tighten their belts a lot.
Given those circumstances, it’s no shock that people want to get the most out of their money. Keep reading for King Cash’s guide to wringing the most value from your hard-earned money.
Review Your Finances
Do you really know where your money goes? If not, don’t feel too bad. Many people move from paycheck to paycheck, paying bills as they come in, but not really certain about their financial situation.
Yet, personal financial management and any bid to prevent debt must begin with knowing your actual financial situation. That process begins with a thorough review of your finances.
You must go through your pay stubs, bills, credit card statements, and checking account with a fine-tooth comb. Start by figuring out your average income. If you have a salary, that’s pretty easy.
If you have variable income, add up your income for the past three months and divide by three. That gives you a general base point for your income.
Next, create a chart that lists all of your payments made for the last three months. Include everything from getting gas to bills. Put the payments into categories like bills, food, and entertainment.
Again, divide by three. That gives you an average for your monthly expenses.
The difference between those numbers tells you whether you live within your means or beyond them.
Create a Budget
Now that you have a picture of where you stand on the financial front, you can build a budget. Building a budget isn’t the most exciting activity, but it’s a very powerful tool for understanding and managing where your money goes.
You can pick from several possible budgeting methods, such as:
- 50/30/20 budget
- Envelope budget
- Zero-based budget
- Pay yourself first budget
There are a few others, but one of those listed above will work for most people. If a particular budget type doesn’t work for you, don’t overcommit to it. Keep trying different budgets until you find one that works for you.
Pay Down Debt
Consumer debt is an incredibly powerful force in modern life. It’s almost unavoidable if you want things like a home of your own or even a vehicle.
Yet, consumer debt can easily become a destructive force in your life as well. Consumer debt is also very expensive. Interest on things like credit cards is literally money you throw away.
Paying that interest does not get you the most value for your money. If you already have consumer debt, paying that debt down is one important way you can reclaim the value of your money.
If your debt feels overwhelming, consider using a debt payoff method like the debt snowball or debt avalanche method.
If you have a short-term financial crunch, though, a short-term loan may help you balance your current needs with long-term debt management.
Set Financial Goals
Another key way that you can make the most of your money is with clear financial goals. Let’s take the basic example of saving money.
Everyone gets the advice that they should save money and a shockingly high percentage of people don’t do it. It’s not that most people don’t recognize the value of saving money, but it’s a process without context.
It’s a bit like exercising and eating right. Most people don’t get serious about those things until they have a reason for it.
Saving money becomes much more important if you save for something. Maybe it’s a house or maybe it’s a month-long vacation somewhere exotic. By setting a goal, though, you give yourself a reason to carry out the activity of saving.
Consider the things you want out of life and set financial goals that align with those things. That lets you apply your money to areas that matter to you.
Automate Your Savings
The flip side of the goal-setting approach is automating things like savings. Many people find that if they simply automate putting away 10 percent of their income, they simply learn to live on the 90 percent that lives in their checking account.
It also means there is one less thing you must manually take care of with your money management.
Excise Useless Purchases
As you went through your purchases in your financial review, odds are good that you ran across a lot of useless or unnecessary purchases. For example, maybe you subscribe to three or four streaming video services.
Do you actually use all those services? For that matter, do you use any of them on a regular basis? Odds are good that at least one or two of them are useless purchases for you.
Do you pay for memberships or subscriptions you never use? Subscriptions and memberships aren’t bad things in and of themselves if you use them. If you don’t, you can reclaim that money and put it to use somewhere else.
Invest in Your Retirement
One of the key ways you can get the most out of your money is by investing in your retirement. There are several available retirement options, such as a registered retirement savings plan or a tax-free saving account.
While these types of accounts provide limited financial value now, they’ll provide a lot of value once you retire.
Leveraging the King Cash Guide
The King Cash guide provides you with many options. Don’t let the choices overwhelm you.
Start with low-hanging fruit by reviewing your finances and building a budget that works for you. After handling those essentials, work on the other things like paying down debt, limiting useless purchases, and investing in your retirement.
King Cash specializes in small, short-term loans. For more information, contact King Cash today.