Creating Financial Stability on Any Budget
By: Edie Tuck
Tags: Financial Planning, Money Management, Saving, Finance, Money

78% of Americans are living paycheck to paycheck. 53% of Canadians follow suit, as well as approximately 31% of Brits. It’s scary to think that so many of us are less than two paychecks away from being homeless. In a time where job security is quickly becoming a thing of the past, that fear weighs heavy on many of our minds. But we don’t have to live under that stress umbrella.

Regardless of your income, there are things you can do to prepare yourself for any potential downfall. I’m not saying there will never be a time of emergency when things are difficult, but with the proper precautions, you can give yourself your best chance.

Here are nine things you can implement in your life now, to ensure a financially secure future:

Automatic Savings

Whatever our financial situation is, it’s up to us to make sure that we’re prepared for life’s curveballs. The easiest way to do this is to set up your banking to automatic transfers on payday. This can be any amount — don’t dig yourself deeper in a hole, just do what you can, even if it’s the bare minimum.

For the past few months, I’ve had an automatic transfer of $25 go from my checking account into my savings account every Friday when I get paid. It’s out of sight, and out of mind. I don’t miss the $25 because it’s a small enough number that it doesn’t affect my day-to-day living, and it adds up! Now that I’ve paid off one of my debts, I’ll be increasing that $25 to include the amount I was paying on my debt weekly; I was already paying it, so now I’ll just be paying it to myself!

Some banks also give you the option to ‘save the change.’ You can set up your account so that whenever you make a purchase, any cents that are above the rounded dollar on your bank balance is automatically transferred to your savings. This can be 3 cents, or it can be 98 cents. If you think of how many purchases you make with your debit card on a weekly basis, you could build up a hefty nest-egg in no time, without feeling the pinch!

Evaluate and Minimize Your Purchases

Have you ever found yourself searching for solace in retail therapy, and then coming home with your purchases and not knowing where to put them? Are you finding clothing in your closet with the tags still on them months (or even years) after you’ve purchased them? You’ve got “stuff” filling every shelf, nook, and cranny, and keep buying more? You’re not alone!

Shopping addiction is a real thing, and although many people would deny having the affliction, a simple look in many of our homes would prove differently.

If you were to keep track of all your purchases for a month, you might be surprised at what you find. The number of needless things we buy is not only cluttering our homes, but also depleting our bank accounts! Take stock of what you already have, and change the way you shop. Only buy what you need, but aim for quality purchases. They might cost you a bit more upfront, but they will last you much longer, saving you money in the long run.

While you’re at it, you can even sell or donate the things you don’t actually use, and make a few extra dollars to feed that rainy day piggy bank. As a bonus, you’ll probably find that a decluttered home makes for a clearer mind; it’s a win-win!

Pinch Your Pennies

Similar to evaluating your purchases, pinching your pennies takes it a step further. Sometimes you’ve got to be a bit of a Scrooge (minus the humbug attitude) in order to get ahead. Are you grocery shopping at the high-end supermarket and paying top dollar, when you could be going to the smaller chain for the same products at a fraction of the cost? Are you eating out four or five times a week instead of cooking your meals at home?

Becoming a penny pincher has nothing to do with being ‘cheap’, and everything to do with knowing what your priorities are. If you can feed yourself (and your family if you’ve got one) for hundreds less per month by changing grocery stores, then why haven’t you done that already? If it’s a matter of distance, you’ll find that many large grocery stores now offer price-matching! Just do your research and find the deals before you get to the store so you don’t make everyone in line behind you angry.

Invest in Yourself

How many older people do you know who have difficulty making ends meet on their retirement income? Many of them are finding themselves back in the workforce because they don’t have enough to cover the bills and put food on the table or pay for their medical care. It’s never too late to start setting yourself up for success!

Just like with the first idea on this list, you can do the same with investing in yourself — and your retirement. I’m not saying you should put all of your money in high-risk stocks, but putting money away every month in a retirement savings plan will give you that extra bit of breathing room when retirement comes around.

If you’re not sure how much you should be putting away, speak with a financial adviser who can help you calculate how much you’ll need at retirement. Taking inflation into consideration, they can tell you how much you’ll need to live out the rest of your life without compromising your lifestyle once your regular paychecks stop coming in.

Stay on Top of Fluctuating Debt

I’m talking about credit cards. Not everyone has them, but many do. Those little colorful bits of plastic that are so easy to pull out when you want something you can’t afford — and then all of a sudden the bill comes in and you can barely make the minimum payment.

If you know that your income isn’t high enough to cover hefty credit card payments every month, you need to become more aware of your usage of them. Keep them for emergencies — because those tend to sneak up on us! Or if you’re trying to build up your credit, then only use them when you know you’ve got the money in the bank to pay for your purchase, and then pay the bill right away.

Interest rates on credit cards are what keep you in debt, and credit card companies know this. They’re more than happy to keep you paying the minimum payment every month because that means they’ll have you under their thumb forever. Don’t buy what you can’t afford to pay off right away, and pay your bills in full every month.

Go Old-School

If you’re not old enough to remember the days before debit cards, ask your parents, or even your grandparents. In the US, debit cards were introduced in the mid-1970s, but many people retained their old-school ways for many years — sometimes decades — to come. Here in Canada, the six major banks introduced them in 1982 but growing up, I remember my mother never having one. When she needed money, she would go to the bank and take some out at the teller.

Looking back, I think they had it right. It’s hard to forget just how much money you have to spend when it’s in your wallet! If you’re not comfortable carrying large amounts of cash around with you, you can implement the envelope system. Leave enough money in the bank to cover all of your automatic payments, but take out what you need for everything else, keeping it in labeled envelopes for every separate expense.

It’s an easy way to stick to your budget — if money comes out, a receipt goes in! You can’t over-spend if you see what you’ve got. You won’t be accidentally dipping into your overdraft, or spending too much and have your rent or car payment turn to rubber.

Watch Your Due Dates

I know first hand what it feels like to get that dreaded ‘pit in the stomach’ sensation every month when the bills start to come. And it’s even worse when the envelopes arrive with a bright red ‘past due’ stamp on the front. I’ve been there, so if that’s your reality right now, I know your pain.

If you’re having trouble staying on top of bills, the first thing to do would be to look at each one and determine where you can save a few dollars. Do you really need 700 television channels, or could you make do with 200? Are you paying for three different on-demand services like Netflix? If so, could you possibly go down to your favorite one and cut cable out completely?

Once you’ve cut back as much as you can, the key is to stay on top of them every month, without fail. Budget for them in your envelopes from the last idea on this list if you have to. Make sure that if you’re paying them online, that you make the payments at least a few business days before the due date so that no late-payment fees are applied to your next bill. Not only are you in charge of what you pay, but you’re also keeping a clean financial record for yourself, and your credit rating will reflect this. Be on time, every time, and keep the wolves away from the door.

Educate Yourself

If math isn’t your friend, or you’re anything like me, then anything finance-related can be a complete bore. But if you’re going to create financial stability for yourself, then you need to educate yourself. This can mean a lot of things — a lot of which we’ve already talked about but bear repeating.

Know what you’re paying for — all of it. Bank fees, hidden charges on bills, interest rates, everything adds up. If you’re not aware of them, you don’t know where your money is going, and there’s a good chance you’re overpaying for things.

Also, keep yourself at least somewhat informed on economic trends. This isn’t to cause you stress or panic, but if you’re in the know, then there are fewer chances of you being caught off guard when the market drops, jobs disappear, and taxes make massive hikes. It’s definitely worth taking a few minutes out of your day a couple of times a week to catch up on what’s going on in the financial world. Your future self will thank you when you’re still able to put food on the table if you get laid off.

Get a Side Hustle

This one is by far my favorite, and by the looks of every social media feed, it’s also everyone else’s. The infamous side hustle. This can be absolutely anything, and you can make it as interesting as you want it to be. Don’t get me wrong, it can also be a real chore, but sometimes we need to sacrifice a little bit now so that we can have security later.

If you’re reading this, then odds are you’re also a writer here, so this would definitely constitute a side hustle. Unless you’re a celebrity in these parts, in which case it might be your full-time hustle.

You might also go to work full time, and then clean houses on evenings and weekends. Or maybe you sell lipstick, or totes, or scented wax bars. Perhaps you tutor high school students, or walk dogs in your neighborhood, or sell your handmade crafts.

Whatever it is, it’s helping you bring in some extra income every month. My suggestion is, if you’re able, to put all of that extra income directly into your savings account. You’ll find your nest egg growing much faster, and your level of finance-related stress shrinking just a little bit with every new deposit.