How to Keep Your Finances Straight in Toronto
Big city living also comes with big time price tags. So if you live in a large city like Toronto, what can you do to keep your finances in check, especially when it seems like prices are so steep and always rising?
With a few smart decisions and some willpower, you can really create a stable financial position for yourself, even in high cost-of-living areas. If you are a Toronto resident hoping to balance your budget and straighten out your finances, consider the following tips on your financial literacy journey:
Make a Budget and Stick To It
This may seem obvious and simple, but it can be a challenge to allocate a dollar amount to certain categories to keep your spending in line with your earning. First, consider what your take home pay is, and then consider your fixed expenses like rent and car payments. Finally, adjust your discretionary spending as needed, based on your income. Be sure to also designate a certain amount for saving.
If you have a difficult time sticking to a budget, examine your expenses from previous months and see where your toughest categories are. If you consistently spend more than you should on groceries or at bars, consider if you want to keep those expenses and allocate less to other categories, or spend less on those expenses to give your budget extra breathing room.
Cut Unnecessary Expenses
This tip also ties into the previous tip. Since you have already identified your fixed expenses versus your discretionary expenses, you now know the areas of your budget that can be trimmed to save you some extra money each month.
Consider which categories can be eliminated entirely, and which categories can be reduced. Can you keep your weekly restaurant lunch, but eliminate your daily latte and make yourself a coffee at home? Can you cut out your satellite radio subscription and just listen to regular FM? While some expenses cannot be cut entirely, consider which can be reduced. Can you get takeout twice a month instead of every week? Can you eat meatless one day a week to save a few bucks on meat at the grocery store?
Everyone’s situation is unique, and there are endless ways to shave a few dollars off your expenses that can be put towards saving for an emergency or larger financial goal, like a down payment on a house. To keep yourself motivated to reach a goal like that, keep an eye on real estate in Toronto, so you know what amount you are aiming for.
Automate Your Savings
Once you have created a budget and cut unnecessary expenses, you should ideally have a surplus of money at the end of the month. The key is not seeing this surplus and spending it, just because it is there and you can. To avoid this problem, automate your savings.
Set up an automatic transfer from your checking account to a savings account (whether at your bank or another bank, if you might be tempted to just transfer it back if it remains at your regular bank). You may also want to work with your employer to set up an additional direct deposit of a certain amount to a savings account. This will allow you to put money into savings without even seeing it and being tempted to spend it.
Setting up a budget, trimming expenses, and automatically saving will set you up on the right path for your finances. If you are hoping to straighten out your money situation, these three steps will help.