Money seems to be this taboo topic to a lot of people that is just never supposed to be talked about. People skirt around the topic like they’re hiding some deep, dark secret from everybody else. They ignore their personal finances like some magic is going to happen and everything will work itself out. Tip: it won’t.
Unless you want to be living paycheck to paycheck every month of your life and be struggling to make ends meet, you need to start putting a little bit of effort into working on a budget to manage your finances. Here’s why you should care:
It will ease your stress. Let’s face it – money is stressful sometimes. Worrying about bills, rent, food… money can and will affect how you look at a lot of things. In fact, a 2014 study by the Financial Planning Standards Council showed 43% of Canadians listed money as the greatest source of stress. Getting your shit together financially will give you peace of mind. By understanding exactly where you are financially and the steps you need to take in order to get to the right place, you’ll be able to sleep soundly and not stress about your money.
You can get out of debt. This kind of ties back into easing your stress, but debt is like an anchor weighing down on you. It can prevent you from saving any money, it will cost you more than you may think (especially with 20.99% interest rates on credit cards), and can cripple your ability to live life how you want. The only way to deal with debt without digging yourself into a hole, is to pay it off. By budgeting your money, you’ll not only learn how to pay off your debt, but figure out how to do in the most cost-effective manner as possible (hint: it’s not by making the minimum payments on your credit card).
You don’t have to worry about when your next paycheck comes in. Don’t get me wrong, if this is how you live and it’s working for you, there is nothing wrong with that. I would personally prefer to not have to worry about when my next paycheck comes in. When you plan and save properly for emergencies and unexpected expenses, you’ll never have to worry about getting your paychecks week to week. The extra stress that this relieves will do wonders for you.
You can save for retirement and big ticket purchases. It seems like it’s a far ways away, but a lot of life’s milestones will get you before you know it. Saving for retirement might seem pointless when you’re young and are making little money, but when you consider the effect of compound interest (don’t worry – there will be a post on that) it will make it more than worth your time to start now. For big ticket purchases, like a house, there are usually some pretty large price tags and a cost paid up front. When the down-payment for a house can be $100k+ you’ll want to have some time to save that up before you decide it’s time to buy.
You can still go out with your friends. Wait … what? It’s possible to save money AND still go have a good time with your friends? Yes. Well, maybe not 5 times a week, but if you learn to properly save your money and budget your spending, you’ll know exactly how much you should be spending each time you go out. Maybe that means only having 2 drinks instead of 3, or maybe it’s not ordering that second plate of fries, but you can definitely still go out with your friends and have a great time without blowing the budget every single night.
You can still buy yourself (and your loved ones) nice things. Yes, saving can do wonders for you. By setting aside just a bit of money every week, you’ll be able to save up enough to buy yourself and your loved ones some nice things when you need to. There should always some flexibility for some fun spending in good budgets, because everyone wants to have nice things.
You can still go on vacation. Believe me, I need that vacation too. There is no way that I’m letting budgeting get in the way of my beach time. Allocating a portion of your savings to a vacation fund is an easy way to quickly save up a few thousand bucks to take a trip down south or across the pond. It’s that easy.
You need a budget. I’m sure most of you don’t want a budget. Not all of you will be as weird as me. The simple fact is that you need a budget. I’m not going to lie, budgeting isn’t very fun. Without a budget you won’t have anything to guide you or tell you how much you’ll need to save, or how much you’re spending, or where you can cut your spending, or how to pay off your debt, or how to live below your means. There’s so many things that will hinge on you having a budget. It sucks, but we’ll walk through it together to get you there.
There are a lot of reasons why you need a budget that I can lay out, but in the end it also comes down to your motivations. For example, maybe you want to be able to support and provide for your family without having to worry about money. You could want to be able to put your kids through school one day, or have that dream house you’ve always wanted. There are financial benefits to having your budgets, yes, but I think more important than that is the personal motivation to become financially secure.
I started caring about my own personal finances because I had just started my first job out of school realized that the money I was making was quickly disappearing from spending it on things I probably didn’t need. I can’t even tell you what I bought during that time, which means that it obviously wasn’t important. I quickly discovered that if I ever wanted to move out of my parents house I’d need to get my shit together financially.
My parents were also very good with managing their money while I was growing up. Whether it was personal sacrifices they made in order to put my brother and I into hockey when we were kids, or if it was teaching us about the value of money and learning to save at a young age. They were huge impacts on my perspective towards money and I credit a lot of my financial knowledge base to them.
In the end, everyone has their own reasons as to why they want/need to make a change financially and they’re all just as important. The only thing more important than your motivation is to start.
I’ll walk you through how to get started and create a budget on a future post.
Thanks for reading, eh!