With interest rates expected to rise many Canadians are second-guessing some of the financial decisions they have made; 43% regret how much debt they are currently carrying.

When looking at your personal finances remember it is not just about the math; your emotions, psychology and behaviour play a significant role in how you manage your money. Controlling your cash flow reduces stress and allows you to enjoy life without worrying about keeping your head above the water.

Here are six steps to help you stay on track:

First: Calculate your net monthly income. Avoid using your gross monthly income because some of this money will automatically be deducted; including taxes, EI, CPP and investment contributions. Furthermore, don’t include bonuses, tax refunds and investment gains, these will vary; best to plan to use this extra cash to pay off debt or plan for a special event.

Set financial goals. Now that you know exactly how much money you are bringing in, knowing in advance where you want it to go will help you stay on track. Whether you want to pay off debt or save for a vacation, knowing what your goals are helps curb your discretionary spending.

Calculate fixed expenses. Car payments, rent or mortgage payments, utilities, insurance and other fixed costs should be separated from your discretionary spending. Make your financial goals part of your fixed expenses and pay yourself first.

Strike a balance between Needs and Wants. Dining out, travel, gifts, clothing etc. are all discretionary spending and generally not critical. The key is balance. A little fun once in a while is important and will help you stay on track, just be aware of what you are spending and try not to use credit to fund your social life.

Have an Emergency Fund. Planning for a rainy day will help you stay out of debt. Unforeseen expenses like car repairs or a new roof can set you back. By saving a little each month in a separate account you will have the cash available to cover these unexpected expenses.

Be Aware of your Spending. Credit and Debt cards have made it easy to forget how much we actually spend on unnecessary items. Keeping track of how much you are spending will give you a new appreciation for your hard earned money. Review your expenses regularly and try to cut down where you can without being too restrictive.

If you are looking for something more tailored to your individual spending habits give me a call, we can review your situation and develop a personalized Cash Flow Plan.

Remember, controlling your day to day spending is the first step in achieving any of your short or long term financial goals.

Have a great weekend,

Tracey

 

 

Source: Original article by Centum One Financial, The Money Finder, MT08-06-2015, 09-13-17BNN Bloomberg.ca

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