With the price of housing steadily on the rise with no signs of slowing down, it seems more important than ever to stick to your monthly budget. Whether you’re saving for your first home, paying off a mortgage, or content renting, the high cost of living in urban centres can’t be ignored.
Thinking of buying a resale detached home in the 416 area? According to Toronto Real Estate Board (TREB), the average selling price in August 2016 was over $1.2 million. The 905 area isn’t much more affordable with the average selling price coming in at just under $1 million That’s 23% higher than the previous year. Did your salary go up more than 23% in the last year? Probably not.
Debt has become the norm in North America; you’re either paying it off or saving up for a large purchase that will require you to pay it off (like your first home!). Whether you’re in debt or not, you need to manage your money on a daily, weekly, monthly, and annual basis. We hope these tips can help you stick to your monthly budget:
1) Change your entire way of thinking
Okay, that’s not super helpful – we’ll be more specific. Most people think about their budgets as the amount of money they can spend. You should change that to “the amount of money I shouldn’t spend.”
If your total budget for the month is $3,000, then just don’t spend more than $3,000 and you’ll be saving money. You shouldn’t be spending money just because you haven’t hit your cap yet. Part of your budget should just include money that’s going directly into your savings.
2) Carry tangible money
It’s pretty safe to say that the majority of people use credit cards, debit cards, and e-banking. People even have the option of paying for things with their smartphones. It can be difficult to stick to your budget if all you’re doing is tapping a piece of plastic and getting something in return.
Go ahead and take a step backwards technologically and start carrying cash. It’s accepted everywhere and when you use it, you physically lose something. The transaction just seems more real when you’re handing someone a tangible thing in exchange for your pumpkin spice latte. Make a habit of withdrawing your spending money on a weekly basis and if you run out of cash before the week is up, then you’re having tuna and crackers for lunch.
3) Always factor in recurring expenses
You basically know exactly how much your rent/mortgage, phone bill, hydro, Netflix, gym membership, Internet bill, and condo fees will be – so add them up and understand that these need to be paid every single month.
If your budget is $3,000 and all of your recurring expenses add up to $2,000, then great, you’ve given yourself $1,000 for everything else. It may help to not even include recurring expenses in your budget. Just pay those bills and base your budget on whatever you have left.
4) Set up automatic transfers with your bank
We mentioned including your savings in your budget. That’s difficult for some people to do. Instead, you can simply set up automatic transfers with your bank. Every week or every paycheque, tell your bank you want a certain amount of money automatically transferred to your savings account or Tax-Free Savings Account (TFSA). This way, you don’t even notice that you’re saving – it just happens.
5) Reward yourself!
…In non-monetary ways. At the end of the month, if you realize that you saved a lot of money or you simply stayed under your budget, don’t go on a shopping spree. There are plenty of free and affordable ways to reward yourself for sticking to your budget.
Plan a park outing with friends, go for a long bike ride, watch an extra hour of Netflix, eat a whole bag of chips in one sitting – you deserve it. You’re obviously going to do all these things anyway – just feel good while doing them because you’re being responsible with your money.
We hope these tips help you stick to your monthly budget!