November is Financial Literacy month in Canada. The Financial Consumer Agency of Canada reports that 43% of Canadians have no financial plan. Budgeting is the key. Salyzyn & Associates Limited, Licensed Insolvency Trustee, provides the following six reasons why you need a budget.
1. Helps you stay on track: A budget helps you determine your long-term goals. If you go through life without having a budget then you may never save enough money for a down payment on a home or that vacation you have wanted to take. Budgeting forces you to focus on your goals, save money and track your progress.
2. Reduces Stress: A recent national survey has found that 42% of Canadians rank money as their greatest stress. How often have you tossed and turned as a result of worrying about how you will pay the bills? Having a budget allows you to sleep better at night. It will allow you to take back control and you will never lose sleep over financial issues again.
3. Allows you to determine needs vs wants: Having a budget allows you to take a closer look at your spending habits. Are you spending money on things you don’t need? Once you determine where you are spending your money you can then decide if it is the best use of your money. Can you reduce your spending in one category, for example eating out, in order to increase how much you save?
4. Avoids debt: In today’s age of electronic spending, using debit and credit cards, we often spend money we don’t have. We don’t even realize we are overspending until we are drowning in debt. Having a plan and reviewing your spending at the end of each month will ensure that you are not spending more money than you have. Don’t be afraid to reach out for help if you find your debt problems overwhelming. Debt counselling from a Licensed Insolvency Trustee can help set you on the right path.
5. Allows you to Save: Do you have a particular financial goal you are working towards? Perhaps you want to contribute more to your RSP ,TFSA or save for a vacation. Having a budget helps you keep an eye on the prize.
6. Surprise expenses: Everyone should have an emergency fund that doesn’t involve dipping into credit. The emergency fund may be to get you through a few months due to a lay off or illness. It will ensure your finances don’t spiral out of control after an unexpected life event. Build an emergency fund into your budget. Set a realistic goal and start small. Even small saving can add up over time.
For more tips and financial information visit our website at www.mydebtfix.ca.
Do you have financial question you would like answered in a future column? Email us at firstname.lastname@example.org
Brenda Wood is a Licensed Insolvency Trustee with Salyzyn & Associates Limited. She has over 20 years of experience in financial counselling and lives with her family in East Hants.