Tuesday, March 31, 2015
Top Five Mistakes
Simple solutions to stop living paycheque to paycheque
By Jason Brown, Envision Financial, First West CU
The top five money mistakes are:
“The biggest mistake I see people make is living paycheque to paycheque,” says Tanya Wilson, investment advisor at Envision Financial. “What’s most interesting to me is there is a simple solution to this problem, namely pay yourself first.”
“I have had clients completely turn their financial situation around by having their pay cheques directly deposited into their accounts and then automatically transferring 10% to retirement and 10% to short-term savings before they get the chance to spend it,” she says.
This straightforward strategy will have even the most liberal spenders squirreling money away for retirement and at the same time eliminating the risk of using credit for life’s little emergencies and unexpected expenses.
To help preserve the remaining cash left in your bank account after the automatic debits, Wilson recommends reviewing the things you automatically pay for but don’t use, such as unlimited calling, texting on your cell phone or even home phone service.
Another easy way to save is to make smart swaps.
For example, don’t eliminate your daily trip to the coffee house, just buy a less expensive drink—like $2 drip coffee instead of a $5 mocha latte. “That takes your coffee budget from $1,825 to $430 per year, leaving you with $1,395 in wiggle room,” says Wilson.
For an additional boost to your emergency savings, sign up for a debit card savings program that rounds up every purchase to the nearest dollar and transfers the additional amount to your savings account.
Getting your finances in order can be done without sacrifice—and that’s no joke.
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