July 5, 2022

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Top money management tips that everyone can do

There’s no one best way to manage your money. But there are top tips every personal finance expert uses. Here are habits you can copy and do too.

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Q: My wife and I got married about five years ago. We both finished our post secondary education and found jobs in our chosen careers. We thankfully were able to keep working during the pandemic and managed to pay extra down on our debt. We had no idea we could live and spend less; we thought we had a pretty frugal lifestyle as it was. This was a wake-up call for us and now we’re wondering how to keep doing what we were doing even though things are starting to get back to normal. Are there any dos or don’ts we should for sure follow? — Neil


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A: While affecting every Canadian a little differently, the pandemic was a financial wake-up call for almost everyone. For some, their income was drastically affected. For others, they spent less because less was available. For many, coming to the realization that they don’t need to spend as much as they’ve been spending to live a lifestyle they enjoy is priceless.

It’s easy to start thinking that you need to use credit in order to lead the life you’d like to live. Our wishes and wants tend to be bigger than our pay cheques. From a car loan or lease to credit cards for day-to-day spending and a line of credit for bigger purchases – as soon as we use credit, we are in debt. And no one ever says they were glad to get into debt.

Living without debt is not as far-fetched as it might seem. People who live without debt aren’t typically the richest. Rather, it’s those who have learned that they need to make the wisest choices with what they have. One of those wise choices is not paying expensive interest on things they won’t remember buying when their credit card bill arrives. They plan their spending carefully and stick to the best strategies that work for them. Here are three you can copy and start doing right away:


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1. Make spending choices based on your goals

If you don’t know where you want to go, it will be hard to determine your path. Think about your future, rather than only the here and now. That makes it easier to manage your money because it shifts your focus from the immediate to the longer term. Then set SMART goals to help you get there.

If you’ve never set a financial goal, start with something small and meaningful. For instance, if you have one bill that is bothering you, consider starting with that one, or with a part of that one if it’s big. If you want to challenge yourself to save up for an expense, that could also be a good goal to start with. Once you achieve the first goal you set, cross it off the list and set another one. This will keep you focused on your future, and away from being distracted by less meaningful, immediate wants.


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Examples of Common Financial Goals

2. Shake the belief that debt is the path to your dream life

Marketing tactics have become one of the powerful ways that debt has become normalized in our society. Ads promote the thought that without financing a purchase now – even something you were already planning on buying – you’re somehow missing out. Clever marking might make it seem like you’re missing out on a great deal, a time-limited opportunity, or an offer that will somehow make you feel more satisfied with your life.

Don’t beat yourself up if your credit cards reveal you’ve normalized a certain amount of debt in your life. Instead, let those statement be your motivation to make choices and changes. Stop yourself when you look at marketing hype and recognize it for what it is. It’s these conscious decisions that will set you on your path to the life you truly want to live.


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Learn More – How Marketers Influence Your Money Habits

3. Establish discipline with your finances

Living within your means so that you can avoid debt means making spending choices on an ongoing basis that are in line with your income. However, many people bristle at the thought of letting a budget control their choices.

Ironically, it’s often these same people who let their debt do exactly that. While it might not seem like it, debt controls your choices by what you can’t do whereas a budget is a plan for what you can do. Those who are good with their money understand this difference.

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When creating some financial discipline for yourself, start with what you can do right away. For example, look at your system for paying your bills. Determine on which days in the month you will pay your bills. Most of them can be paid early, so getting organized with a pay cheque plan will help you do that. Then determine if you can pay more than the minimum on your credit cards and choose an amount that you can add to your payment every single month. When it comes to spending, wait until you need something before you buy it, and then only buy what is on the list you made before you started shopping.


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Don’t be surprised when these smaller steps lead to a desire to create a household spending plan for yourself and your family. Here’s how to create a budget that works !

Other habits of financially successful people

Smart money management is about making wise choices on an ongoing basis, rather than big choices periodically. It comes down to making mindful spending decisions aligned with your goals which allow you to live within your means. Here are ways financially savvy people do that:

5 Habits of Financially Successful People You Can Do Too

1. They don’t normalize extra expenses

One of the key things savvy personal finance experts do is they don’t turn extra expenses into normal expenses. For example, meeting a colleague for a morning coffee to discuss a project that neither of you has time to talk about during the work day. If you don’t stop yourself, this one-off coffee meeting could easily turn into grabbing coffee every time you head into your workplace.


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It might not seem like a big deal – it’s just coffee – but the ramifications of turning this one extra expense into a normal expenditure can add up. If one coffee sets you back about five dollars, grabbing coffee three mornings a week comes to $15, or at least $60 a month. Saving $60 a month towards a year-long goal would mean having an extra $720 saved after 12 months, simply by staying the course and not turning an “extra” into a normal expense in your budget.

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2. They aren’t a slave to their mortgage

Another smart money tip relates to housing costs, especially if you have a mortgage. If you end up committing more than you can reasonably afford to your mortgage payments, then all of the extra expenses that come with owning a home can force you into a tight spot. And if interest rates go up, the tight spot could be more than you can bare.


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Being a slave to your mortgage means other big life choices will also be affected, like if you can save for expenses or if changing jobs is possible. For instance, you may find that you “need” a car loan to afford a vehicle because you couldn’t carve out money in your budget to save up for one. If your pay cheques are fully committed to all of your expenses, you or your spouse might feel trapped in your current job because starting over elsewhere could mean less income.

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3. They structure their life to support their financial decisions

Those smartest with their money do what they can to create structure in their life that will support their overall goals. When they make buying decisions – from a car to a new coat or even a home – they focus on what they’ll use the item for most of the time.


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For instance, when buying a vehicle, if they know they’re driving a lot in the city and can make do with a compact car 95 per cent of the time, they won’t buy a pricier SUV.

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The same can be said of a new coat. Unless they are spending every weekend in the mountains and need a coat for extreme conditions, they’ll buy a more reasonably priced one that suits their lifestyle most of the time.

And when it comes to their home, likely the single biggest purchase they’ll ever make, they’ll consider carefully how much home they truly need for what they anticipate doing there most of time. A busy executive couple who spends most of their time at work and play, often needs a smaller home than a growing family or a couple who likes to entertain house guests and groups of friends.


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4. They look for ways to reinforce their decisions

Even the best laid plans face challenges. Those who manage their money with a long term perspective know they’ll face bumps in the road. To help themselves through the tougher times, they find ways to force themselves to stick to their plans.

For example, they buy or rent a smaller home with less storage space so that they are forced to buy less “stuff.” They re-frame how they shop for clothing. They don’t look for five tops to match one pair of pants so that they’ve got five different looks. They buy five tops to match five bottoms for 25 different outfits.

It’s easy to pick on coffee and the “latte factor” when talking about smart money tips. However, every aspect of our spending can benefit from a critical look when we’re striving to manage what we’ve got in the best way possible.


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The bottom line on making the smartest money choices

Smart money skills don’t happen overnight. You can only figure out what works best for you by trial and error. And sometimes when you think you’ve got it down, life throws you a curve ball. As you implement the tips above and become more confident about your choices, those around you may take notice. Your attitude will seem unfamiliar and the habits you adopt could be viewed as unusual. But remain firm in your resolve that you’re doing what’s best for you and your family’s financial well-being.

Related reading:

Keep Your Good COVID Money Habits and Ditch the Bad

7 Debt Repayment Mistakes That Keep You Broke

How to Break the Cycle of Living Pay Cheque to Pay Cheque

Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by email , check nomoredebts.org or call 1-888-527-8999.



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