NSLAP WELLNESS TIP: It's a new year – time for a money makeover?

The following article is from Homewood Human Solutions™, your health and wellness provider. 

Money. It is a simple five-letter word, but for many of us it has the ability to stir up feelings of uncertainty and worry. We often feel that our financial resources (or the lack of them!) control our lives, and it’s true that many lifestyle choices are determined by how much or how little money we have at our disposal. In order to maintain a healthy perspective, it is important to develop an understanding of how to manage money in ways which are aligned with our short-term objectives and long-term goals.

Managing money is a learned skill – not something we are born with. Applying smart, responsible money management skills is the best way to eliminate financial stress. And when we are in good shape financially, we create happier, healthier, wealthier and less-stressed families. So let's begin!

People often think that money management is a hugely complex process, when in fact simple, consistently applied steps can help us achieve very dramatic results. The way to begin is to take stock of your current financial situation. Knowing where you stand now is the foundation on which you can build your financial plans. Even if you don't like what you see, an accurate and realistic assessment of your current situation lets you determine the steps you need to take to see improvements. Start by listing all your ongoing monthly expenses in these five key areas:

Housing costs: Mortgage/rental payments, property taxes, gas, hydro, rented appliances, home insurance, improvements and maintenance.

Food/household: Groceries, telephone (including cell phones and calling cards), cable and internet service, computer repairs, personal care items, hair care, clothing, pet costs, laundry/dry cleaning and life insurance.

Transportation: Car lease/purchase payments, gas, repair/maintenance, car insurance, licence renewal, parking and public transit costs.

Discretionary expenses: Savings, RRSP, vacation, education, tobacco/alcohol, dining out, entertainment, clubs, child care, medical/dental, school, hobbies, gifts and donations, spending money, allowances, gym memberships and subscriptions.

Debts: Payments for lines of credit, credit cards, home improvement loans, consolidation loans and Canada Student loans.

After you have completed this exercise, compare the total of these five expense areas to your total net or take-home income earned each month. If the results show that you are spending more than you are making, it is time to take these positive steps:

  • Examine ways to cut back by setting clear priorities about what is and is not important, and adjust accordingly. Look at your lifestyle in terms of likes and dislikes – you may be surprised how you have changed but your spending habits haven't.
  • Write down every single thing you pay for over the course of the next month – groceries, gas, takeout lunches, video rentals and outings to the movie theatre. Remember to include incidental purchases like newspapers, magazines, coffee and popcorn at the movies. Keeping track of your spending lets you find situations in which you casually spend money or pay more than you need.
  • Use a debit card instead of cash. This way, you will have a monthly bank statement to help you keep track of exactly where your money is being spent.
  • Form a plan of attack that is realistic. It should focus on necessary day-to-day expenses, realistic long-term goals and reducing any overspending that is creating problems.
  • Be proactive rather than reactive. Reduce your number of credit sources down to one or two.
  • Consider consolidating all your credit into a single loan in order to pay down your debt. This option can be especially attractive if you have outstanding debts at a relatively high rate of interest (for example, the interest charged on many retail store cards or credit cards).

Finally, if you are still feeling overwhelmed after reading this, consider an appointment with a financial counsellor through NSLAP (contact info below), which offers budgeting advice, support, cash flow analysis and referrals to community resources to help you take control of your financial life.

Ultimately the key to wealth is to "live within your means and spend less than what you make." And the key to happiness is to be grateful and appreciative for what you already have!

For more information and support on a money makeover, along with resources and counseling in other life topics, visit the NSLAP website at www.nslap.ca. Please note that NSLAP is your “company” name when you register. When you call the NSLAP number at 1-866-299-1299 (Français: 1-866-398-9505; TTY: 1-888-384-1152), your call will be answered any time, day or night, 365 days per year.