Written for: The Canadian Press
Budgets
Its easy to talk about planning a good life, but it all begins with the creation and maintenance of a healthy budget. Sticking to one, though, can be a tricky business.
“It takes discipline and planning,” says Jonathan Sceeles, a Certified Financial Planner, and Financial Advisor at Edward Jones. “Start out each month by setting a goal. Look at your fixed costs. Saving should be one of those fixed costs. We all need to save for our lifestyles in the future.”
Putting aside money for retirement, for example, is harder now as the cost of living increases and wages do not rise in response—making the creation of and adherence to a budget all the more paramount.
Whether you’re saving for a perfect beach vacation, a new home, or just a rainy day, long-term goals are a great starting point. According to Sceeles, there are a multitude of ways to successfully reach them.
“You could have two types of spending,” explains Sceeles. “One bank account, usually chequing, which pays out your expenses, and another that is used for everyday spending. Once the latter is empty, you know you have to stop spending.
Clients can also set up automatic payments to their savings accounts. This helps “force” clients to put aside funds. Keeping track of receipts can also be a much-needed physical reminder of all the “inconsequential costs” that can accrue over time.
“If you’re addicted to that Starbucks in the morning, keep in mind that all those costs add up,” says Sceeles. In fact, according to Laurie Campbell, CEO of Credit Canada Debt Solutions, the number one cause of bankruptcy is mismanagement of funds.
So what happens when you find yourself in dire financial straits?
The best place to start is a frank and open discussion about money, whether it be with your family or a financial professional. The stigma attached to financial troubles can be a major impediment to moving forward but it is in everyone’s best interest to be as honest as possible.
The shame or embarrassment surrounding debt can be so crippling that it prevents people from seeking the help they need.
“They might feel alone and don’t know where to turn,” says Laurie Campbell, CEO of Credit Canada Debt Solutions. “People in financial trouble can also be very vulnerable to scammers. They are looking for immediate relief.” Campbell advises to look for financial aid companies that are certified and registered with reputable associations to ensure that clients don’t fall into a never-ending circle of debt.
While it may be tempting to seek solutions that provide instantaneous results, it’s important to remember that debt relief is a long-term process.
“Don’t just look for the lowest interest rate,” cautions Sceeles. “Treat your own personal debt like a mortgage: have a plan and schedule for paying it down.”
“Everything takes time,” says Campbell. “Financial planning and budgets are completely bespoke programs for each person and each situation.” A credit counselling service, for example, communicates directly with creditors, helps consolidate debt, and can even align with credit card companies to help clients rebuild credit and re-establish themselves financially.
The most important takeaway, however, is just how important a budget is to living your best life. Taking agency over your finances can protect and build your wealth, aid in times of financial struggle, and secure a comfortable future. A good budget can make the subject of money less scary, and give you peace of mind. The sooner you start, the better.