The notion of wellness encompasses many different elements, one of which is financial well-being. Given that the RRSP (Registered Retirement Savings Plan) contribution deadline has now passed, and tax returns are upcoming, what better time to assess your relationship with money and improve on your savings habits? Here is my advice on the matter as a young professional.
What is your Plan?
The first thing to plan when you collect your paycheck should be how much of it you need to set aside to achieve your financial goals. Right now, is your mind asking: which financial goals? If so, you’re part of the 50% of the population who do not have a plan. The good news? This can be fixed as your financial advisor is just an email away. Saving and investing, using goal setting is a great way to plan for events such as buying a home, retirement and unforeseen events such as a job loss. Remember, if you fail to plan, you are planning to fail!
Pay Yourself First
How often do you end up spending your paycheck on housing, loans, food and leisure with little left in your account? This scenario plays out all too often as we design our spending around what we deem necessary expenses and hope to have some income left over for savings. The notion ‘Pay Yourself First’ is a philosophical shift in how you budget and organize your life. Start with setting aside what you need to achieve your long-term goals and arrange your expenses with what’s left. This might lead to making some tough choices; public transit vs a second car loan payment, a smaller house, a cheaper gym membership and cooking more often instead of eating out (which, by the way, is good for you: see our meal prep blogon the subject!). Ultimately, these choices will lead you to achieving a more balanced and financially sustainable lifestyle with less stress. Ask yourself what is it that you need vs what is it that you want.
Start small, but start!
While downsizing your house/apartment or trading in your car for a bicycle can have a significant effect on savings, it may not be feasible in the short-run. Rest assured, small changes in your daily spending can go a long way, too. Don’t worry, trading in your Starbucks coffee is not necessarily one of them! For example, with streaming apps and Netflix, can you finally cut cable and the 100$ monthly expense, or 1200$ annually? Also, pack a lunch for work by cooking bigger portions during dinner the night prior (or during the week-end if you have more time!). Finally, a personal favourite: invest in sustainable clothing and avoid falling in the culture of ‘fast-fashion’ which leads to overspending.
What are your tips to reduce your unnecessary spending in order to set money aside?