Several grim polls and statistics reveal that many Canadians are struggling financially. According to the MNP Consumer Debt Index, over half of Canadians say they are $200 or less from not being able to pay their bills and debt obligations each month. Meanwhile, according to another poll by Leger, about half report that they are living paycheque to paycheque.
If you’re struggling to save any money at the end of each month, know that you’re not alone! It’s a common issue in Canada. To help break the cycle of living paycheque to paycheque, consider the following five tips.
1. Create a Budget
Let’s start with the basics: creating a budget. List your total monthly income and your necessary expenses. Be realistic about your necessary expenses. If you budget $100 toward groceries per month, that’s not a realistic estimate. The average person spends $300-400 per month on groceries. Be similarly realistic about all of your necessary expenses and sum up the total. These will likely include rent/mortgage payments, utilities, transportation, and groceries as well as some occasional expenses. Don’t neglect the occasional expenses, such as birthday gifts or Christmas gifts.
Once you’ve got a realistic estimate of your unavoidable expenses, subtract it from your monthly income. If there is a mismatch between the income and the expenses, consider whether any of the expenses can be reduced. If that is not feasible, you know that there is an income problem. If you can reduce your expenses, you know that there is a spending problem.
2. Increase Your Income
If your realistic budget reveals that your income is simply not sufficient to cover the necessary expenses every month, you need to work on your income. There are several ways to tackle this.
One way is to take on a part-time job or weekend gig to supplement your main income. This could be more casual or relaxed work. Even a few hundred dollars of extra income a month can make a difference in some people’s financial lives.
In addition, you could potentially monetize a hobby or special interest that you have. This has never been easier, given today’s social media. If you have an artistic inclination, you could look into selling your art online.
Finally, you might consider retraining for a new career altogether. While this may seem daunting, there are more ways than ever to acquire new skills. Given the Internet, you can attend online courses or bootcamps, watch tutorials, and read useful materials. Oftentimes, these resources are available for a small fee or even free of charge. Make sure you don’t discount any opportunity too quickly.
3. Reduce Unnecessary Expenses
If the budgeting mismatch has more to do with your expenses, you may consider reducing your spending. For example, if you have a habit of purchasing a coffee every morning, you may wish to make your own coffee at home. If you stop buying that coffee at McDonald’s every day for a year, for instance, that could translate into potential savings of over six hundred dollars! These smaller purchases that you make on a daily basis or even occasionally can amount to much larger expenses over the course of a year.
In addition, make sure you cancel any unused subscriptions. Sometimes, we don’t even realize that we have an unused subscription lurking on our phones. This could save you an additional amount every month.
Review any other expenses that could be avoided, such as eating out or buying new clothes. Cooking at home is usually cheaper and healthier than going to restaurants. Financial discipline requires commitment on your part and the willingness to forgo certain pleasures and luxuries in service of a larger goal.
4. Consider Debt Consolidation
If you’re struggling with multiple different creditors, consider consolidating your debt. This will mean a single monthly payment – possibly at a lower interest rate – which may help lower your stress levels.
5. Get Professional Advice
Finally, you may wish to speak with a financial advisor about your unique situation. When a professional can evaluate the specific details of your financial situation, they can provide tailored advice to help you improve your cashflow management.
Conclusion
In sum, breaking the paycheque-to-paycheque cycle is, at its core, a math equation. You need to figure out where the mismatch lies, in terms of your income and expenses. Whether you work on increasing your income or reducing your expenses or both, commit to the long-term process of improving your financial health. If you need a loan to help you bridge a cash shortfall between paycheques, apply online via Friendly Lender. We don’t check your credit score or credit report during our simple online application process, and you may have funds deposited directly into your bank account in as little as 24 hours!
