How to save money: Personal Tips

Money is important. For some, more so than others. But for everyone, we all have a need for money. With the financial situation the way it is, it is so much harder to save money and get ahead today than it was a few years ago. Sometimes we all feel that we can never have enough money, or we just can’t cut corners enough to save…the truth is, saving can be fun, and can provide satisfaction in itself.

Essentially in order to save money, you have to ensure that your expenses are less than your income. An easy way to do this is take a summary of your past 5-6 months worth of expenses and average them out to get a monthly expense figure. This will allow you to understand where you stand. If you need to supplement your income, try passive income, or even start looking for a temporary part time job. Once you have detailed your status, you can now try and determine how you can save money and start moving ahead, or out of debt.

Firstly, figure out what you classify as wants and needs. Remember each person is different, each situation will be different. You are the only person who can determine what you need to survive (usually food, shelter, clothing etc) and what you want to survive (entertainment). Looking into this factor, should allow you the ability to save approximately 3% of your income each month.

Food: In my opinion, food is the killer for monthly expenses. Far too often are people spending too much money on food and in turn only hurts your finances and your health. I started my budget in January 2009, and since then I have been able to spend on average $45/week for 3 people. During this time I also lost 10 lbs. I am a pretty active, healthy person, so to lose the weight was just by really planning what foods we needed to survive. I don’t suggest buying in bulk. Why? In my experiences, although the price may be cheaper, if the food is in your home you will consume it no matter what. For example: buying bulk juice boxes: the more of a product that you have, the more you think you can consume…Therefore the product will diminish in almost the same amount of time. Also, within the food category is restaurants/take out, which is again a killer. One night out can rack your expenses up 60$ just for one meal! Watching your grocery bill, in my opinion could save another 3% of your income each month.

General Shopping: Research is key! There are several guidelines that I recommend to save money while shopping (clothing, cleaning products, misc. items etc). It is important to remember that not all brand name products are worth the mark up. On the flip side, some “no name” products really are cheaper quality and will not last compared to their brand name counter parts. It is really important to research for big ticket items to ensure that you are making the right decision. Coupons/discounts: Such a large part of our society today. How many times do you hear about campaigns that offer a free product with the purchase of a different product? For example; I clearly recall offers of buying a new T.V and you get a digital camera. Take advantage of the promotion; however don’t just buy it for the sake of buying it. That is why planning is essential to saving money. With a plan, it’s harder to veer off course. With planning and researching, you can save approximately 3% of your monthly income.

Eliminate Interest build up: Common sense here states that paying interest (credit cards) is a vicious cycle. It is too easy to put everything on credit card and fall into the trap of debt. I try to pay for everything in cash. I do have 1 credit card for emergency situations; however I really limit the use of the plastic. Doing this, depending on your current credit card balance, could save you 2% of your monthly income.

Overall there are several methods to saving money and being more frugal. These are just some of the options that I follow strictly. If you have any other suggestions, comment on this post!

 

Paycheque to paycheque..

A recent article published by the Canadian press states that almost 60% of all Canadians live paycheque to paycheque. Shocking news, but very sad news. Essentially this means that if you didn’t receive a paycheque, or it was received 2 weeks late, 60% would have difficulties paying their bills.

What does this result from?
          *Lack of knowledge from a young age
          *Living much beyond your means
          *Cost of living is expensive

What steps should you take if you fall within the 60% of people?
*Understand your situation
*Create a goal(s) with a timeline
*Create a structured budget
*Create an emergency fund, plus additional savings/investment fund
*Rapidly work your way to debt free lifestyle
*Eliminate all negative spending habits

It’s really all about balance. Balance provides the stability to know that what you are doing today is only benefiting you tomorrow.

Personally, I couldn’t imagine the stress that comes along with living in financial stress. I do not make a lot of money, but the money I do earn is put to the proper use. It would be so easy for me to spend all of my money on stuff (clothes, makeup, entertainment, etc) however I would rather live without the stress than with the items.

 

Long Weekend Spending Recap

This past weekend involved me spending more money than usual. I am feeling somewhat upset about it, but it was all for good causes.

Friday: Handed over the loaned money. It depleted most of my accessible money…so I am feeling the effects of it.

Saturday: Celebrated my Sister in laws birthday at a local restaurant/horse racing event. We usually plan when we are going to do something, however this was a last minute event, so I wasn’t able to plan as usual.

Sunday: Went to my father’s and his partner’s cottage. Although we didn’t really spend any money on this, we had to spend more on gas than usually budgeted.

Overall it was a good weekend, although I am looking forward to getting back on track to finish 2009 off on a positive note.

 

Ontario Tax Harmonization

It has been recently announced that the Ontario government will eliminate its existing provincial sales tax and create a “one” tax for the tax paying population. It is set to be implemented in July 2010, however they are so many changes, that you need to know about the program now.

Breakdown
Simply put, the items that we pay both taxes on currently will not be affected by the HST. The goods and services that we only pay GST on will now be subject to the HST. Some examples are as follows:
           *Gas
           *Shoes
           *Hair cuts
           *Hydro
           *Stamps
           *Vitamins
           *New Homes
           *Rent

Housing
The HST will affect real estate and construction development. Currently, new housing is only subject to the 5% GST, now with the HST in place, new homes will be subject to 13% HST. Sounds like the HST won’t really help most of the population! However, the government have taken this into consideration, and will be offering a rebate for new home purchases. On June 18, 2009 the government announced that all new homes purchased for primary residences will now qualify for rebates up to $24,000 of the 8% provincial component.

Investments
Essentially when taxes increase, it is inevitable that tax payers will pay more money. Even when it comes to your investments, it is possible that you will see more of your money flying out the window. Let me break it down: When the financial services are subject to the new HST, mutual fund companies would need to increase the sales tax that is charged on the management fee from a 5% to 13%. So, when it’s all said and done, the MER’s will eventually increase, making investors pay out higher expense ratios.

It seems as no matter how hard you try, there will always be obstacles in your way. This is just another obstacle put in place to money grab from all citizens, with a probable negative impact on the economy.

 

Credit Card Hobbies

I was recently thinking about my interests and hobbies and how much they are present in my life at the moment. When I was younger, basically all my time was spent on hobbies. Now, as an adult, my free time is much more valuable and therefore I look forward to doing things I love. Have you ever met people, whereby their hobbies were basically putting them into debt? I have! For example; I know a few guys who really love paintballing. Being unaware myself of paintball, I thought you could go, pay $15 and have a good time. Well I quickly found out that you had to buy equipment, guns, the paint, and the memberships….all of which was like $700. I guess I can’t pass any judgement, but I would rather spend my free time stress free, without worrying about money. Of course, there are some people who can easily afford this, and that is great, but in my opinion if you have to pay for your hobbies on your credit card, there is an issue.

My hobbies may be plain, but it’s what I enjoy:

 

As you can see these are some of my hobbies. The list is pretty basic, but it really keeps me in touch with myself, my loved ones, and allows me to really enjoy something extravagant when it happens. For example: Giuliano and I just recently went to Montreal. to some…it might seem small, boring, redundant. But to us, it was just nice to get away, to a new city, and since we don’t usually do stuff like that very often it provides more satisfaction.

Having reasonable expectations and goals allows me the ability to save ($) more than expected. If I constantly wanted something more, better, bigger, I wouldn’t have the sense of financial independence I have at such a young age.

 

Work Life Balance: Does it exist, or are we dreaming?

Everyone jumped on the Work-life balance phenomena when it was first introduced. We all know what makes us happy and satisfied in life, (family, healthy, money, and career success) but are we living up to our expectations? Or can Humans even be satisfied?

On the Company side of it, workplaces now offer more “friendly” atmospheres for employees to benefit. With the implementation of strong Human Resources practices, workplaces feel they are meeting their employees’ needs. Some examples of programs that have been implemented to create workplace balance:

 

With all of these (and more) programs being implemented and moulded to meet the needs of employees, is it enough? Personally, the main thing that any workplace could offer me is freedom. All these programs essentially make you spend more time at the workplace (even if your not doing work), or you feel like you have to be more committed to them. For example: having an on site gym. Sure it’s great to be able to go the gym early in the morning, or after work, but essentially the minute you walk in, you are at work.

Personally, I haven’t reached a sense of work life balance as of yet. My current work is geared towards my skill level, however I do find myself staying late 15 minutes each day, or going home with a few tasks. My time is valuable. I feel that my time is more valuable than what I am currently paid per hour. The only possible way that I could reach a sense of work/life balance is to find something that I truly love and feel passionate about, and do that with a sense of freedom (So essentially, creating my own business). It is not about being lazy. I would be willing and able to put 12 hours a day into something that I love, compared to my current situation of 8 hours per day, doing something that I might like a few days out of the week. I am lucky enough to know a few people in my life that have followed their path and are doing work that they love. These people give me the motivation and inspiration that anything is possible, with hard work, determination and passion.

Quite quickly I have realized that no matter the job, it is still only a job. Sometimes it seems as if we are slaves to the company. In reality most of us are underpaid when you take into consideration the profits of the company, or the pay of the more senior people. In the end, most of us will not become financially wealthy with a job. Passive Income, alternative income, home based part time business, or investing is where you will earn your financial wealth.

In my honest opinion, work/life balance does not exist for the general population, nor will it ever. Work today, is just too much time away from things that really matter in life. The even more depressing factor is the more money you make at a job, the less work/life balance you will feel. So, essentially this is the most satisfied I will be in a job.

 

Update: Business Within the Family

I recently blogged about how a close family member wanted me to loan him money. I really had to think about it because this money was what I have been able to save over the past 9 months.

Update: I have decided to go ahead and loan him the money. How could I not really? It’s a favour for him, and in the end it will be a favour for me as well. This is really my first time loaning anyone money. I made a few mental notes for myself to follow to ensure that everything is done properly.

1. Evaluate: I had to evaluation my situation. Can I survive without this money? If there were an emergency, could I pay for the situation in advance? Also, I have to evaluate his situation. He is a reliable, professional person, and truly only asks for money for serious issues, not leisure or wasteful reasons. For example: Without any offensive feelings, I would not be loaning money to anyone if the money were going to such things as drugs, alcohol, or any other addictions.

2. Same expectations: Going into this we both have to want the same expectations. For example: Same interest return rate, same initial amount of money to be loaned. We both have to understand when he needs to money exactly, and when I will receive the money back. Having different expectations will only lead to tension, and bad feelings.

3. Writing: Always, always, always make sure that everything is in writing. Not only do I follow this in my personal life, but I follow this in my work life as well. I document everything, and ensure that proper processes are followed. For this situation, he and I signed off on paper agreements, which is essentially a business agreement.

All in all, I feel happy that I am able to help family and friends. Sometimes we have to look at our situation, and realize that in the big scheme of things, most of us are pretty comfortable and have a wonderful standard of living.

 

Weekend Spending Recap

This past weekend was a very inexpensive weekend for me. I barely spent any money, which I am happy about. As summer comes to a close, I want to ensure that we do as much outside activities as possible. The last 2 summers here in Toronto have been nothing special with mostly rain, cloudiness, and minimal pure sunshine. Going through another winter without any real memories of summer, will be depressing.

Here is a breakdown of what I spent:

     Thursday:
          Groceries $26.72
          Gas $23.00

     Friday:
          Visit Family $0.00

     Saturday:
          Coffee’s $6.00

     Sunday:
          Milkshake $1.05

     Total:
          $56.77

We had a good weekend overall. I spent a lot of time with family, and Giuliano. Sunday afternoon we played sports together, and went down by the lake with our Milkshake. All in all, we had a rewarding weekend, and it didn’t cost very much either. Having fun doesn’t always have to cost a lot of money.

 

Keep your spending in perspective

I like to observe, listen, and reflect. To be honest, I find myself listening to others conversations very often, not so much to be nosey, but rather just to be aware. Whether it’s at work, out at events, shopping, walking, I listen and observe everywhere I go.

Recently, I overheard a conversation with 2 women talking about makeup. Very interesting conversation to me, since I am a female and I do like makeup. But I was simply blown away. They were talking about how much they spend on certain products, the name brands, how often they buy it. I was thinking to myself, how can anyone spend $80.00 on a bottle of foundation? My foundation only costs $14.99 and I try to buy it only when it’s on sale.

I came to realize that if someone were listening to me, talking about my makeup and how much I spend, they might experience the same shock value. They might think to their self, “Wow, how can someone spend $15 on foundation, I only spend $6.00.” These examples are present in all aspects of our lives. From media campaigns to situations we come across every day.

Simply put, it is all about perspective. It is how you view your current situation that should matter, not what the person across the table is doing. When you constantly try to compete with others, that is when trouble begins. You try to live outside of what you are able too, and gradually you put yourself into debt. Some people are able to spend $80.00 on foundation and to them, that amount represents $15.00.

With that being said, to understand your perspective, you need to know your current financial situation. Sadly enough, some people don’t even know how much debt they have, or the interest rates on their credit cards. The first step of putting everything in perspective is figuring out where you stand. Once you have determined that, everything else will fall into place.

 

My Budget Spreadsheet

Now that we are in the paperless society, have you converted to online budget software? There are so many different, yet effective software programs that allow users (you) to really understand your spending habits and see them visually (graphs).

Personally, I created my own budget spreadsheet with excel and I have found it to be very helpful. Microsoft Excel is a very powerful tool, especially when you know what tools and functions to use. I have included many graphs within my spreadsheet, drop down menus, macros, advanced calculations and many other functions, all in the name of budgets. Below is a snapshot of my spreadsheet.

The benefit of creating your own spreadsheet is the ability to mould it to meet your needs 100%. Since I have used my spreadsheet, I am able to compare spending habits over periods of time. For example; I previously talked about my Food cost over the last 6 months.

Other graphs that I have set up within this spreadsheet:
*Fixed Exp. Vs. Variable expenses
*Savings vs. Total Expenses
*Savings vs. Income
*Quarter Updates

I am happy that I have transitioned from pen and paper, to computer software. Not only is it enviro. friendly, I find it to be more motivating and allows you the ability to analyze in depth.