Tag Archives: budgeting

Money Management Tips

So, if you’ve been following along the past few weeks, you’ll know my ‘bad debt story’ and how I’ve worked on fixing it. Being better with money is something that I’m proud of. I try to share my experience with people so that they don’t have to go through the same stuff I did – please learn from my mistakes!! I know these tips aren’t groundbreaking but they’ve helped me out a lot.

Track Your Spending

I started tracking my spending before I made my budget. It helped me understand how much I was actually spending so I could make a realistic budget. I used an app called ‘Expense 5’, which was really eye-opening – tracking it in real time and being able to look at it at any time was a quick reality check. I’d look and think “wooooah, I’ve spent how much on snacks and Starbucks this week?” – I was quickly able to adjust. Without tracking my spending, I’d have no idea what’s going on.

Use Cash as Much as Possible

I used to watch a money show on TV and the debt counselor always told these people to use cash because it was easier to track. I do try to use cash as often as possible. I find that I am more conscious of my spending if I have to count out the money or I can see it dwindling down in my wallet (when you tap your debit card, you don’t even see your balance go down – is ignorance really bliss?).

Not Using Credit

If you struggle with debt and always being in the red, commit to not using credit. I don’t have credit cards because of my debt repayment program, but I can confidently say I haven’t missed them at all the past two years. I used credit like “free money”, which we all know it’s not. By eliminating credit cards, I get rid of that temptation of spending money I don’t have. I’m much more careful with big purchases now that I don’t use credit – I’m not as impulsive when I know the money is gone instantly.

Make a Realistic Budget

Ugh, if only I knew this when I first started out. Yeah, it’s nice to think you’re not going to spend any money on taxis all month, but let’s be real. Or it’s nice to think you can only eat out once a week, but is that really going to happen? Be realistic! If there are areas where you know you struggle or will have difficulty reducing your spending, is there somewhere else in your budget to cut the slack. This also is true with rent and living expenses. Is your budget realistic to your expenses and income? For example, I was budgeting to move out and realistically, my rent was $1,400 once I factored in utilities. However, I only budgeted $1,200. What was I thinking? Idiot, Nicole. Don’t be like that guys. If you make commission at your job (or have other variable forms of income), don’t factor that into your budget! Think of it like a bonus every month but budget to live without it. Leave wiggle room in your budget, too. If there’s an unexpected expense, you want to be able to afford it without going too far into the hole.

Budgeting: The ‘20/30/50’ Method

Let me first preface this post by saying I am by no means a money expert. If you were to ask my closest friends and family a few years ago how I am with finances and budgeting, they would have laughed. But after a few years, lots of debt, money issues and living pay cheque to pay cheque, I’ve learned a lot about budgeting, money management, and saving. I’ve tried a few different ways of budgeting but this method seemed to work the best for me. I will also say that I’m really open about my money issues and what I’ve learned and gone through so if you have any questions feel free to comment below.

I used The ‘20/30/50’ Method to make a new budget this year and found it the easiest to work with and the most straightforward. Making a budget + tracking your spending can be very eye-opening if you’re diligent with it. It can show you where you’re overspending, where you might need to increase savings or income or where you might have extra money that’s unallocated. The budget I make is just for myself – J handles his money separately, which works for us – so all my numbers are for ‘my half’. You can download an editable copy of my ‘20/30/50’ budget and try it out for yourself!

Okay, so The ‘20/30/50’ Method has three categories and each number stands for a percentage of your total monthly income. So for example, 20 is 20% allocated to savings. The categories are:

50% – Must Have

Rent, utilities, car payments, #AdultThings that you need every month that no one really enjoys paying for – am I right? You’ll see in the template that among my must-haves I also budget for taxis and Car2Gos. Luckily my company reimburses me for the metro pass, so most of that budget gets used on taxis, Uber, and car shares. We live in midtown Toronto and don’t have car payments or parking but occasionally use a car share program or take taxis + Uber.

20% – Savings + Debt

This is fairly self-explanatory. I am on a debt repayment program so I like to allocate as much money to that every month as I can. However, J and I decided to start saving at least $100 from every pay cheque. I’m more confident in my spending habits and was able to move some money around to do so. Sometimes if I’m having a good month I’ll even put more than $100 in after all my debt + must haves are taken care of. Debt repayment is always going to be a top priority for me but it’s good to save. I also put money into an RRSP at work, which comes out every pay cheque and I don’t even notice. I would recommend doing that with your company as well, especially if they do partial or full match contributions. I promise you won’t even notice it’s ‘gone’.

30% – Everything Else

Anything that doesn’t fall into the above two categories, don’t forget bank fees!

This is always the first area that I look at to cut down on spending. For example, I switched from TD to PC Financial because I was tired of spending on bank fees. PC is a great option for ‘free banking’. If switching isn’t an option, look into how much you get charged in bank fees every month – I never did and it was astonishing to see it add up! Try to find an account that has as little monthly or annual fees as possible (that still fits what you need it for). Eating out has been a big adjustment for J and me! Before we got our condo together we were eating out a lot because we never had groceries. Now that we budget groceries into it, have our own kitchen and enjoy cooking again, we can cut down on eating out. I like to keep the ‘everything else’ category as small as possible. I have an ‘everything else’ line item in there, which is just my miscellaneous category for monthly expenses that don’t fit elsewhere.

In addition to budgeting, I also track my expenses using the app “Expense 5”. It’s been my favorite expense tracking app so far and the easiest to use. I actually prefer not attaching my bank account to a spending app because I find manual entry easier and more accurate. If you want an app that attaches to your bank account, I recommend Mint.

It’s recommended that you re-adjust your budget every month but I haven’t gotten that intense about it yet. This is a good starting off point. I recently had my best friend do this budget to help her assess where she can save and used it to help her goal plan for the future. For example, if you want to move out but haven’t yet, you can use this budget to make a ‘mockup’ of what living solo or with a roommate would cost and whether you can afford it.

I hope this was helpful!