Congratulations on making it through the end of the fiscal year on campus! This inevitable, yet often trying, time of year can be very stressful, particularly if you are like me and have a fear of tiny boxes filled with numbers.
According to the Financial Planning Standards Council, 42% of Canadians rank money as their top source of stress. As a young professional currently renting a one-bedroom, planning a wedding and hoping to eventually start a family, finances are always top of mind and often a source of stress. Caring for our financial health and finding ways to manage the associated stress is vital to our overall wellbeing and quality of life.
With this in mind, spring feels like a great time to begin thinking about ways to boost fiscal health, perhaps through a financial cleanse. Think of it as spring cleaning for your wallet!
1.Track where you’re at
Though it may be tedious and it might seem like a slow start to the process, it is impossible to make improvements to your spending habits without first assessing where you are at. For best results, track your spending for a minimum of 30 days. The good news is that there are lots of spending trackers and budgeting apps that can make this step less painful.
Mint.com (App or desktop)
Budget Calculator in Excel (Credit Counselling Society)
2.Take stock of your existing inventory
While tracking, take stock of what you already have in the way of clothing, health and beauty products, non-perishable food, etc. Create a list so that you are on top of what you currently own. This decreases the likelihood of making purchases “just in case” or because you’ve forgotten what you’ve already bought.
You might also want to take this time to look at any ongoing monthly subscription services that you are paying into, like Netflix, meal delivery services, gym memberships, magazines or catalogues. Are you receiving the value you expected at the start? Are you making the most of the services? Do you think that the service is worth what you are paying (i.e., would you sign up now if you were not already subscribed)?
3.Consolidate your plastic
The average Canadian has two or three credit cards in their name and close to half are carrying credit card debt month to month. Try making purchases without a credit card (using debit instead), or if you like to get rewards points, ensure that you have the money needed to pay off the purchase in advance. Consider closing one or more of your credit cards (remembering to hold on to the oldest one for credit history purposes). There are a variety of different strategies for how to go about paying off credit card debt, but typically anything that goes above and beyond the minimum payment per month is a positive step.
4.Establish a debt plan
On top of credit cards, many people are also facing car loans, mortgages, student loans and other personal loans. These debts can weigh heavily, restricting daily financial decisions as well as overall mental health. Consider creating a debt repayment plan. List all of your debts and their interest rates and determine a minimum monthly payment for each that you are comfortable with. Explore ways of consolidating loans, and use any savings from other areas to help pay down the remaining balance.
5.Try a fiscal fast
If you are trying to curb spending or change your financial habits, stop spending money (except for essentials of course) for one week. This will force you to make do with what you already have and stop you from spending on “extras” or unnecessary items. You may discover that there is a lot that you can do without money or that you can find new value in what you already have. To make it more fun, try it as a challenge with a friend or within your family.
Check out the Money Diet: Withdraw all the cash you will need for essentials for a week. Avoid using debit or credit cards and see if you can make it through the week.
*Bonus tip: Put up a “digital defense”. Remove temptations that could lead to online shopping by unsubscribing from store newsletters or offers for products. You may also want to consider creating a self-imposed ban on online purchases during certain times of the year.
I realize that some of these steps may not be feasible, or may not appeal to everyone. Even if this is the case, I encourage you to use the start of spring as a reminder to look after your financial health. Financial stress, left untreated, can have significant impacts on our mental health and on the wellbeing of those around us. And don’t be afraid to reach out for support, especially if you just can’t bear to face the tiny boxes with numbers all alone.
All my best,