Posted on Tuesday 15 October 2019
You’ve got a steady job, you can pay your bills on time, and you can even stash a bit away in your savings account. But, this is only the first half of it. You must consider; is your savings account growing? Is there a better way to build your financial health?
For many, knowing what to do with the money after they make it is a great challenge. Like the Sphinx riddle, there's no clear, one way to handle money. Everyone can spend money in whatever way suits them. However, just blowing it away on New Year doesn't cut it.
Thankfully, understanding the basics of money management is easier than being a mythic Greek hero. You can start to make your money count immediately, regardless of your financial situation. All you need is to arm yourself with the right tools.
You can make your money work for you, not against you. So keep reading to see three expert ways to get a hold of your financial health.
The first rule of making money serve you is to spend within your means. Taking out too many debts can smother you financially. Whether you have credit card balances, a car loan, student loans, or any other kind of debt, you’re going to be paying competitive interest rates every step of the way.
If you’re only making the minimum monthly payments, your debt is compounding by the day. Before you know it, that $300 room at a hotel can turn into $350 or $375, and with credit card bills, every bit counts. An e transfer payday loan can help you resolve this, but you still need to pay it back.
Also, write out exactly how much you owe. This can be a huge step, especially if you’ve been avoiding your credit card statements. Make a list of everything you have left to pay on your credit cards and loans and determine your interest percentages. It’s important you fully understand where you are and take ownership of your debt.
If you use the Snowball Method, you can first make double payments to the card with the lowest balance. Then, once it’s paid off, you simply take the same amount and apply it to the next lowest card. The trick is to keep doubling down on payments until you are clear and free.
You can also consider consolidating your debt, whether it’s combining your student loans, refinancing your mortgage, or getting an online payday loan deposited into your account to pay off multiple credit cards at once. You might find that simplifying your finances and taking care of multiple debts in one payment is the best approach for you. Online personal loans in Canada can assist with this, but you need to pay them back.
No matter how you decide to approach it, cutting down your debt is the best way to start taking control of your financial health. We’re all tied to our debts in one way or another, and it’s not always in our control. However, once you start taking care of the things you can control, you’ll find that life becomes much easier.
One of the best ways to ensure that every dollar is truly maximized is by giving every dollar a specific purpose. Budgeting is about retraining the way you look at your daily spending habits. Budgeting can also help you to adopt everyday ways to save. Over time, being mindful of how much you are spending and where you are spending it will help you start to see your money in a new light.
There are many ways to make creating a budget as painless as possible. If you like the thought of having your budget at your fingertips 24/7, you should consider signing up for a budgeting app.
Apps will keep track of each bank transaction and assign it into categories like Groceries, Entertainment, Restaurants, Bills, and more. Since they sync up automatically to your bank account, it’s a good way to start categorizing your spending habits and get a good picture of your financial health. Some have fun tools like graphs, charts, summaries, and push notification reminders when you exceed your monthly budget in a specific category.
You may have heard of the 50/20/30 rule before. It’s a tried and true method for organizing personal finances and is widely recommended by financial experts. The main idea behind the 50/20/30 rule is that you separate each paycheque into percentiles: 50 percent, 20 percent, and 30 percent. Each fraction has its own assigned purpose:
Take half of your paycheque and put it to the things you absolutely need to spend money on. Your necessities may not be the same as your neighbour’s, but generally speaking, everyone falls into at least the same breadth of categories. Necessities apply to things like food, mortgage or rent payments, and any minimum payments that you need to make to debit on student loans, credit cards, or car loans.
Once you get used to splitting your income into Necessities, Savings, and Wants, you may find that your percentages have been completely out of whack. For instance, you may have been blowing half your paycheque on weekend trips with friends or going to restaurants every night instead of the grocery store.
Learning how to make your money work for you involves finding the best approach for your lifestyle. The 50/20/30 rule is straightforward, making it a great solution for anyone who feels overwhelmed just by the thought of managing money.
Now that you’ve got some savings under your belt, it’s time to start making passive income. This is the ultimate way to make your money work for you because it requires almost zero effort on your part. Investing will help you put your money is always put to work, even at 3 A.M. when you are fast asleep.
There are plenty of ways that you can start investing, but here are two of the most common:
Find out if your employer offers a pension plan. If they do, you should think about enrolling. You can start putting money towards your retirement while also getting some additional money from your employer. This type of benefit doesn’t come around often.
A pension plan is super simple. First, you decide how much you will contribute each payday. A portion of your pre-tax earnings will then be sent to your retirement savings account. Then, your employer uses that amount to determine how much they will contribute. This amount is different for everyone, but usually, employers pledge to match a certain percentage of the amount you put away each year.
The stock market can be complicated if you aren’t familiar with it. Except you are a stockbroker or a financial whiz, creating a portfolio of investments may feel overwhelming. Luckily, several companies out there are making investing accessible and easy. Finding the right company or financial planner makes it easy to manage your savings and investments and can help you plan for retirement, a home purchase, your children’s college education, and even your dream vacation.
Be sure to read online reviews to ensure they’re a great fit. If you prefer to do it yourself, you can start looking into a collection of low-cost index funds to help you start building your passive income. You’ll pay a 0.25 percent annual fee, but this is a worthwhile cost to grow your finances without lifting a finger.
Investing apps could also be an option. Apps like Acorns take a unique investment approach. Instead of putting large amounts away into an investment portfolio, this app rounds up all of your debit card spending and puts the leftover change into the stock market. It’s a great way to automate your savings and start learning how investments work without putting too much thought into the process.
If these options seem overwhelming, you can even choose to set automatic weekly deposits into a high-interest savings account at your local bank. Having even a small amount of interest earnings per month can add up.
At My Canada Payday, we are proud to be one of the country’s leading payday lenders. Helping our customers get back on their feet and learn smart financial habits is our passion, and our 5-star customer reviews prove it! Call (604-630-4783) or email ( email@example.com ) us at any time to get in touch with our support team and find out why Canadians across the country are choosing My Canada Payday for their payday loans.