The internet is a very vast, and information filled spaced with a ton of financial advice, and you can easily get lost in it all and miss the basics. Here is a brief, yet straightforward look at the changes you can make that will lead you on the path to financial happiness.
For generations upon generations home ownership has been THE sign of accomplishment. The general public perception is that owning a big house is the best investment you can make in your lifetime. While not completely untrue, owning TOO much house is really not the best investment. Owning a house is often better than paying rent since you will have something tangible to sell in the future. But what happens often is that people are approved for mortgages that have payments far beyond what they can afford and making those payments takes up most of your income. I hope you really like your house, because if your payments are too high all you are going to be able to afford to do is to sit in it and pay for it, or worse, make you tempted to splurge on your credit cards just to treat yourself to something else that isn’t really in the budget.
You also need to consider how long you plan on living in that house before you buy it. The transaction costs of real estate agents and mortgage fees may actually leave you losing money after the sale of your home, even if the market has gone up since you bought it.
If we didn’t have such a fascination with a grandiose living space we might be a little happier in life. The new trend happening in urban centres everywhere is small house- BIG lifestyle. This is one of the most functional trends, and a more financially savvy one because it provides the freedom to do enjoyable things outside of owning a home. Consider downsizing to eliminate your debts.
Commuting to work in downtown Calgary can be a serious time and energy drain while you’re idling in traffic. It’s understandable that you want to be comfortable for your commute and save some time by taking your own car, but the downside is that cars are a horrible investment. As soon as you drive a brand new car away from a dealership you lose money. Not to mention, the purchase of the vehicle is not the only fee associated with car ownership. Insurance, fuel, tire maintenance, license plates, oil changes and never ending maintenance leave you with needing a significant budget for your vehicle. Research says that people end up spending more on their vehicle costs in their lifetime than they have saved for retirement. So the next time you think you need to be driving that Mercedes to impress your clients, think about how much money you aren’t saving for your retirement, and how much this actually matters in the long-run. Choose a practical vehicle that fits your budget, and though it is very difficult to do in much of the city, getting rid of your vehicle entirely will save you a good chunk of change.
THE LITTLE THINGS
Coffee. In the working person’s world, this elixir of life and productivity can really be a leak in your finances. While not a large up-front cost, over time these little $5 coffees in the morning everyday can take a toll on your saving: spending ratio. On average Canadians spend approximately $2000 a year on the beloved drink. $2000 a year going into your savings for retirement or your child’s college fund is a big deal. Don’t let this opportunity pass you by, and consider brewing your own in the morning to cut that cost by 80%!
Bottled Water. When you’re always on the go and rushing around to get things done, buying bottled water can be one of those convenience items that you reach for. Paying on average $2 for a bottle of water, you are doubling your coffee expenditure and cutting into even more of your retirement fund. There have also been studies that have shown that bottled water doesn’t even live up to the standards that our regular tap water does. Keeping a reusable water bottle in your bag, in the car, or at your desk can really cut on the amount of money you spend on something that is free, will help cut Mother Earth a break, and might even encourage you to hit your daily quota of water intake.
Eating Out. We all need to eat and sometimes buying groceries is just such a pain. It may not be practical to home-make every meal and tote your left overs into the office for lunch, but cutting down on how much you do eat out can really make a difference in your spending. Try cutting down by eating out for dinner only once or twice a week. Or perhaps the change might be taking your own granola bars or snacks to prevent afternoon runs to the café.
While some of these things seem like inescapable needs, give yourself a reality check. Do I really need that fancy car? Or can I purchase a more generic car with all of the same features for half the price? Do I need to stop and pick up a latte and pastry? Or can I make a coffee when I get to work (and not spill it all over myself on the way (WIN!)? And really, do I need to have such a big house or is it just encouraging me to buy more STUFF to fill the rooms I’m not really using? Consider what is most important to you- maybe your kids will want to go to college or university, maybe you really want to go on that trip to Hawaii, or maybe you want to have enough money to live comfortably when you retire. Make sure you have your eye on the prize, and let go of any unnecessary spending habits. You will thank yourself later!
If the time comes where you are completely overwhelmed with financial worry, there is always help. Calgary bankruptcy trustees Hardie & Kelly have helped thousands of people avoid bankruptcy and find the debt relief they need. Just give us a call at 403-777-9999, and we can help.Previous: "How to Ruin Your Credit in 2015" Next: "Managing Your Finances When Going Through a Divorce"