6 Tips for Re-Budgeting
Whether you’re working or not, there’s one thing you should be doing during the Coronavirus pandemic, and that’s rejigging your budget. Experts say when you experience a major change in your life, you should readjust your budget, and let’s face it – this pandemic is a massive unanticipated change.
Our lifestyle has changed – we no longer go out with friends to restaurants or bars or hang out socially, it’s been a while since we shopped for luxury and not necessity, and celebrations just aren’t the same. We’re spending less money on the experiences we’ve built into our paychecks and perhaps during this crisis, we can turn that into a benefit and save some money.
Here are our top 6 tips for reviewing your budget:
1. You First and your Family First
Rearranging your budget during a pandemic doesn’t have to be a temporary strategy and making something stick afterwards, means taking a look at your relationship with money. This requires understanding what motivates you to buy in the first place.
Start by asking yourself some questions like: How did my parents manage their finances while growing up? Did my family talk about money? Did we struggle or were we comfortable? How did this affect me? How do I define rich? What will my life look like when I retire? When I shop, how do I feel?
Once you understand your relationship with money, you can start to set achievable goals.
2. Track your spending habits
How you spend your money will let you know where you can save money. Start by looking at your past spending history.
Review your spending
Keep your receipts after grocery shopping and compare to your list – did you buy everything you needed? Did you purchase anything on impulse? Prior to going to the grocery store the following week, do an inventory and see what you didn’t use/had to toss.
Know what you owe and know what you have
Do an inventory of all your debts; write down each debt, the interest rate, how much you owe, the minimum payment and when the expected payoff date is. Similarly, what assets do you have? Do you own a vehicle or a house? How about RRSPs, a pension, TFSA’s?
Get your credit score
Knowing your credit score is important because it lets you know where you stand financially, and it also lets you know your borrowing power. This article from the CBC outlines how credit reports work, and where you can get yours.
Review regularly and meet with a planner
While reviewing your budget during the pandemic is important, what’s equally important is reviewing it regularly. You can do this yourself – or you can meet with one of our Financial Planners regularly. Our experts can help you set your goals and create a plan to help achieve them.
3. Set Your Goals
Once you review your spending habits, you can start setting some savings goals. Think about the following in your budget:
Income vs. expenses
Layout your monthly income and expenses and know your bill payments and their respective deadlines (we can help you set up automatic bill payments according to your payroll schedule).
Taxes
Deduct, defer, and divide – these are the three D’s of tax planning. Keeping your taxes up to date is important because unpaid taxes could result in financial implications from the Canada Revenue Agency. Remember that our advisors are here for you and can provide you with valuable information on tax planning.
Debt
If you owe credit card debt, start looking at a strategy for paying off those high interest cards. Think about the benefits of paying off high interest cards first, versus paying off lowest balances first. Ensure that at the least, you are making the minimum monthly payment on all debts to maintain and improve your credit score.
4. Think, act, save
Saving for the long-term isn’t just about setting up an auto-transfer into a savings account – we can help you with that and even disable your savings account on online banking so you can’t impulsively transfer money out on a whim. Long term savings is also about your career goals. A pandemic might not be the best time for everyone to think about a career change, but it is something to keep on your radar.
Think about whether you are making enough money to pay your bills and keep a roof over your head? Are you contributing to your retirement savings goal? Do you have an emergency savings contingency? Now more than ever, thinking about your financial future is of the utmost importance and our experts are here for you if you need assistance.
5. Planning for an emergency
Contingency savings
We don’t really need to preach this one because it’s pretty obvious why it’s important especially now, so we’ll just say having three to six months’ worth of living expenses put aside in savings is what experts recommend.
Insurance
Home, car, business or life – there’s insurance for all of it. Knowing what’s the best for you, how much coverage you should have, and which policy covers what can be difficult; however, we’ve got an entire team of insurance experts here for all your insurance needs providing you with the coverage on what matters most offering you peace of mind.
Will
Having a will is important because it lets your family members know how you want your estate dealt with as a result of your passing. By having a will, you:
- Get a say in how your possessions and assets are distributed,
- Can identify the beneficiaries of your estate,
- Can appoint a guardian for your children if they are minors, and
- Can appoint an executor who will administer your estate.
Some individuals consult legal counsel making a will, others choose the do-it-yourself kind that can come from the internet or your nearest book store. If you have questions about your estate goals, speak with one of our wealth management experts.
6. Keep it up
Is your mortgage up for renewal? Do you have credit cards you don’t use? Are there government tax-credit programs you qualify for? Start taking advantage of what is available to you to better your financial position. Check in on your debt regularly – if there’s something you’ve been ignoring, start refocusing. Keep your budget up to date and remember to review regularly. Try using our Home Budget Calculator to set your budget.
And finally – talk about money – talk about it with your friends, your family, your banker, your financial planner, and your insurance provider – it isn’t a taboo thing and not talking about it doesn’t help. We are here for you no matter your financial situation. Speak with one of our financial experts today.
