22 February 2021

The best approach to your personal finances

The best approach to your personal finances

There isn’t a whole lot that we can control in this day and age but getting a handle on personal finances is something anyone can do. Yes, anyone, no matter your situation. The key is to start small, advancing slow and steady. As you feel more in control of your finances, you will also experience less stress. We could all use a little less stress these days.



Your attitude towards the process of rehabilitating your finances is as important as the process itself. Finances and the situations that affect them are fickle, so it’s essential that you take it slow, setting small, realistic goals, tackling one problem at a time.



This step is almost like a pre-plan. Write down your long-term goals, go big and bold. Then, make a list of short-term goals that will enable you to reach the larger ones. For example, if your long-term goals included being debt-free and saving enough for a deposit on a home, your short-term goals would consist of paying off your credit cards and starting a savings account. Once those lists are complete, you will be in a better position to prioritize and create new habits that will get you there.



When people hear budget, they often think of tight, restrictive handling of money. While that may be true for some, it’s not necessarily the case. The point of a budget is to set up your personal finances in a way that works best for you. Start by listing all of your sources of income, your fixed expenses, and last but not least, your flexible expenses. Based on your lifestyle and goals, select a budget style that will suit your needs. You can go old-school or choose a popular app for your phone.



Many of us have fallen into bad habits over the past year, including retail therapy. We’ve turned to buying small moments of pleasure to ease the tension of the pandemic. Cutting back on these flexible expenses doesn’t mean cutting them out completely. For example, you can reduce the frequency of eating out, buying coffees and so on. Investopedia.com suggests, “To save $100, you might exchange two dinners out for a bike ride with a packed lunch. Or, dial down a budgeted night out and go to a free concert in the park instead of a pricey restaurant.”



Yet another way we have all embraced to cope with the pandemic is subscriptions. Streaming, gaming, magazines, papers, you name it. While $2 a month for an online game or newspaper might not seem hefty and $12 a month for streaming is cheaper than a ticket to the movies, when you add them all up, you may be surprised. Not only that, but most subscriptions are also billed to your credit card and unless you are paying the balance every month, add to the interest incurred. So, if you aren’t using it on a weekly basis, you may want to cancel your subscription. You could also alternate subscriptions rather than have them all at once.



When it comes to paying bills, the key is paying them on time. If you aren’t the best at remembering due dates, mark them on your calendar or set up a reminder on your phone. You can also set up automatic payments to avoid late fees and interest. Just make sure that you don’t go into overdraft. You can also renegotiate the day your bill is due according to when you get paid. Little adjustments can make a huge difference in your cash flow, with positive effects on your financials.



Get creative when it comes to saving money in little ways. For example, set up a change jar so that when you empty your pockets or purse, you can drop in any spare change or cash you have on hand. You can also try sleeping on impulse buys. For example, if you planned on buying a sweater, wait a day or two. If the impulse passes, transfer the amount that the sweater would have cost into a savings account. You can also sell items you no longer need or use on community websites, adding the money you make to your savings.



Paying off debt is no small feat, but it is an attainable goal no matter your situation. If you have multiple sources of debt, your best bet is to pay it off in one of two ways. The first way is to consolidate it into one payment. If that isn’t an option, make as large a payment as you can on the highest interest debt while continuing to pay the minimum amount due on the others. Once you pay it off, close it and continue to do the same with the next highest interest rate debt.



An emergency fund is huge when it comes to maintaining good finances. While the recommended amount for an emergency fund is 3 – 6 months of income, you can start little. Put aside what you can, when you can. Keep in mind this fund is not for vacations or other flexible expenses. The purpose of an emergency fund is to cover you when unexpected costs arise like car or house repairs if you lose your job, medical bills, etc. The idea behind the emergency fund is that you can cover these large expenses without going into debt or draining your regular savings account. If you don’t have an emergency fund, a quick online loan can be the perfect solution. They don’t affect your credit rating and prevent you from incurring further debt.



Once your debts are minimal, and you have a decent emergency fund set up, you can look into basic investing. You won’t need to jump to anything extravagant but investing can help you save and even make money in new ways. For example, the RoundUp app is a mobile tool that rounds up your purchases and invests those extra cents.


The main thing to remember is to be realistic when it comes to your finances. Your success isn’t based on a dollar amount but rather on how you manage those dollars. Keep at it, slow and steady, and before you know it, you will be crossing those goals off your list and living your best life.


Credito is a Canadian company dedicated to helping hardworking Canadians through tough times. No matter what your credit report looks like, we can provide you with a personal loan. You can always count on our professional, discreet and humane service.

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