If you spend more than you bring in, you are in a budget shortfall situation. You can’t go on spending more than you earn and running up debt, so you need to take action to turn this around.
First take a look at your income. Is it possible for you to increase it by working more hours, upgrading your skills, or getting a promotion? Then take a look at your expenses. You will need to reduce somewhere, so start with discretionary spending. Cut out any expenses that you can do without for now. In the short run it might be painful to give up take-out food, restaurants, movies, new shoes, new sports equipment, etc., but it’s necessary.
Then make sure your fixed expenses are as efficient as possible for the services you have and reduce anything unnecessary. For example, do you have subscriptions that you don’t regularly use such as magazines, cable channels, or other services? Stop those that you aren’t using. Shop around for less expensive groceries, fill up with gas when you find it cheaper somewhere, comparison shop your cell phone provider or your car and home insurance. Big changes might be moving to a cheaper apartment or moving in with a friend or parent to share costs for a while. Look at what your vehicle costs to own and consider “downsizing” your ride. The objective is to change your spending so that you do have some money left over at the end of each month.
If you have a surplus, this means your monthly spending is less than your monthly income and you have money left over. We will deal with “saving” next. You can always find these articles on our website www.actionfinancialgroup.com.
Karin Rimnyak, CERTIFIED FINANCIAL PLANNER®
David Dryburgh, CERTIFIED FINANCIAL PLANNER®
Ian Barrie, CERTIFIED FINANCIAL PLANNER®
This information has been prepared by Karin Rimnyak who is an investment Advisor for iA Private Wealth. Opinions expressed in this email are those of the Investment Advisor only and do not necessarily reflect those of iA Private Wealth. iA private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.