Feeling the budget pinch? Try these helpful tips before you reach out for professional help

by Davies Otwell
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The most important thing to do if your finances are keeping you up at night is to not delay

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It’s not surprising that many Canadians are feeling the pinch in their budgets in this age of inflation-induced prices and rising interest rates. The question is not just what to do about that, but knowing when it’s time to seek professional advice.

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No one ever really wants to ask for help to get back on track with their money or debt, so let’s start with a few steps you can take on your own first.

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If you don’t already have a budget in place, it’s time to make one, starting with tracking where your money goes. You can accomplish this by going through your old bank and credit-card statements to add up what you spent on food, transportation, shelter, etc. The first step to managing your money better is knowing where it is actually going.

Next, build your budget using those tracked numbers. There are some great online tools and budgeting courses you can access for free if you just need a bit of direction to get started. But if just the idea of trying to make a budget has you hyperventilating, then it’s time to seek the professional help of a not-for-profit credit counsellor. 

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Once your budget is complete, you’ll have a good indication of your financial health. If it shows you are managing all your necessities, debt payments and bills, and have money left over for savings, then your budget is in good shape. If you find you are running short each month and relying on credit to make ends meet, then it’s time to revisit your spending in areas where you could cut back.

For example, you may find there are a few niceties that can be reduced in order to balance your budget. Just being aware of your spending habits can often help prevent unnecessary expenses such as eating out or ordering in because you didn’t plan meals or do some prep in advance. Did you realize that a $2-$5 coffee each day on your way to work can add up to $100 per month? That $100 could go a long way towards debt payments or creating some emergency savings.

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If your budget shows you can barely cover necessities such as housing, food or transportation, let alone any luxury items like eating out, vacations and entertainment, you will have to review those necessities to see if you can do anything to reduce them. If your budget leaves you short each month, balancing it won’t be easy or comfortable, but whatever you can do — even temporarily — will help you manage better in the long run.

  1. Knowing your spending patterns and habits can go a long way toward making changes to those behaviours, writes Sandra Fry.

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  2. Homeowners can manage strained budgets by adding to their income and/or trimming costs, at least until inflation pulls back.

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If you’ve already cut back every possible expense, you may need to consider ways to increase your income. A good question to ask yourself is: How can I monetize my interests, skills and talents? Do you have a vehicle that can be used to create income by delivering goods, driving seniors to appointments or even carpooling to work? If you own a home, taking in a renter or international student can help offset some housing expenses. A garage or parking space in a desirable area can also be rented out. If you love animals and work from home, consider pet sitting or boarding as an easy and enjoyable moneymaker. Just make sure your side hustle doesn’t impact your primary source of income. 

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Perhaps your overall debt load is the main cause of your financial anxiety. In that case, consolidating your debt into a lower-interest borrowing product can increase the amount going toward the principal each month, resulting in your debt being paid down faster. But verify the new debt payment amount fits in your budget before you commit to it. Otherwise, adding a payment that is higher than you can manage is only going to make your situation worse, and likely cause you to use those credit cards you just paid off to cover the shortfall in your budget.

The most important thing to do if your finances are keeping you up at night is to not delay. No amount of wishing can make those financial woes go away. If you need help navigating the possible choices, seek the advice of a non-profit credit counsellor. They can help you build a budget and teach you how to better manage your money, as well as provide a free no-obligation review of your finances and explain all the choices you may have. There are a lot more than most people realize. As an added bonus, you’ll be able to sleep better knowing your financial house is in order.  

Sandra Fry is a Winnipeg-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt for more than 25 years.

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