Are you among the 40% of Canadians who say the current economic conditions have caused you increased stress and anxiety? Or maybe you’re the 1 in 2 who say your finances cause you to lose sleep at night?
While money worries can be influenced by things we can’t always control, there may be steps you can take to make you feel better about your financial wellbeing.
Why not start with breaking these 9 common financial habits?
#1. Paying yourself last
In theory, it makes sense: Save any money that’s leftover at the end of the month. The problem? When you’re not automating your savings, it’s much harder to be disciplined about the money that’s still in your account.
If you treat your savings goal as another expense, however, it can be easier to make sure that money goes into savings, like investing or your emergency fund.
This is known as “paying yourself first.”
#2. Getting into debt for non-essentials
It can be tempting to put things on your credit card, especially if you’ve got the best intentions of paying it off soon.
Unfortunately, this can be a slippery slope – just ask the 55% of adult Canadians who have credit card debt. While there are scenarios where this is the result of simply not having enough to make ends meet, you can avoid unnecessary debt by not putting things you don’t absolutely need on your card.
Think about it: Treating yourself to a $100 purchase might not seem like a big deal at the time – but if you’re paying a 20% interest rate and don’t pay it off, you’ll pay $1.66 in the first month alone.
Add that up over time, and that treat might not seem worth it.
#3. Neglecting your financial literacy
As the saying goes, knowledge is power. This is true when it comes to your financial wellbeing. When you’re confident in your financial education, you might be able to make better, more proactive decisions about your financial situation.
Consider taking the time to learn more from trusted sources, like financial literacy books, podcasts or working with a financial advisor.
#4. Leaving money on the table
There are a few ways you might actually be leaving money on the table.
For example, if your workplace offers retirement a matching program – meaning they match your savings up to a certain amount – not taking advantage of that if you’re able means losing out on money that is part of your compensation.
Or, if you’re not taking advantage of the power of compound interest – basically the way that the longer money is saved for and earning interest, the more you accumulate in the long run – you’re potentially missing out on money there, too.
#5. Not creating and follow a budget
As they say: Fail to plan, and you plan to fail. If you don’t pre-decide where your money is going each month, it can be easy to overspend, even on little things that together cumulatively add up to a lot more than you’d realize if you’re not tracking it. There are all kinds of budgeting methods out there. Find the one that works for you, and stick to it.
#6. Not having savings goals
On a similar note, it can be hard to find the motivation to save each month if you don’t have a purpose behind it. Setting savings goals – buying a new car, saving up to go on that dream vacation, retiring one day – gives you something concrete to work towards. Not only does it give you a “why” for any short-term sacrifices you might make, you’ll get to see incremental progress as you work towards those goals.
#7. Not creating a financial plan
Think of a financial plan like a road map for your future. It can include short-term, medium-term and long-term goals. Want to buy a house? Planning to take a sabbatical in your forties? Dreaming of moving abroad when you retire at 65? Hoping you can help your kids with their education? A financial plan – which you might want to make with help from a professional – can help you figure out the practical steps you need to take to make all those hopes and dreams a reality.
#8. Not building an emergency fund
Life happens. Your furnace breaks down, your partner gets laid off, you need to travel overseas urgently for a family emergency. Having an emergency fund can help ease the financial stress of these unexpected events. While the goal is to generally to have between 3 and 6 months of living expenses, start by setting aside anything you’re able, and build from there.
#9. Not reviewing any recurring expenses
A magazine subscription here, a streaming service there. While they’re not huge amounts individually, having a bunch of little expenses that come off your credit card each month can add up to more than you’d think. Take a few minutes to audit these recurring expenses. If you don’t use them, or they’re not a priority right now, cancel them.