You survived the holidays. You rang in the new year. You have your resolutions set.
This year will be your best year yet. You will get that new job. Take that dream vacation. Crush your business goals. Get that beach bod. Find your soulmate. And generally win at life.
And then…. the credit card statement arrives and all those sunny good vibes suddenly disappear faster than the Christmas dinner leftovers. How on earth did you spend THAT MUCH last month? And how will you pay for it without giving up your home in favour for living in a cardboard box under the bridge?
I get it. And you are not alone.
According to a survey by the Chartered Professional Accountants of Canada, the average planned household spending on holiday gifts for 2018 was $643. And that does not account for food, booze, travel, event tickets, and all the miscellaneous expenses that arise during the holiday season.
And maybe it isn’t just the holidays that are a burden on the pocketbook. How’s your day-to-day spending? Do you know where your dollars are going or have a clear picture of your current financial state?
“A budget is telling your money where to go instead of wondering where it went” - Dave Ramsay
Here’s where my experiences in financial woes come in. In 2014, I was doing a great job of hiding the reality that I was living below the poverty line and had over $30,000 in consumer debt. Some of that was a result of forces beyond my control, however most can be chalked up to less-than-ideal life choices. Rather than getting into the story of how I got there, I feel sharing how I got out is much more beneficial.
Enter the magical jars.
The first step was figuring out WHERE my money was going, and then where I could cut costs/curb the financial bleeding. My sister introduced me to financial guru Gail Vaz-Oxlade and her cash system. Gail has since retired and her website has been taken down, so I have sourced some other great resources that give you spreadsheets and ideas to track down those pennies.
The basics are: make a budget, and only spent the allotted dollars for said budget item. Sounds simple, right? Unfortunately for many of us, it has become too easy to tap away those extra dollars.
Figure out how much you make each month. This includes salary, contract/freelance work, tax rebates, support payments, as well as the approximate dates you can expect to receive the income
Determine your recurring fixed expenses. This includes mortgage/rent payments, transportation expenses, utilities, subscription services, fitness/memberships
Calculate the debt repayments that you will make monthly, if applicable
Any remaining funds can be broken down into variable expenses (groceries, dining out, entertainment, clothing, etc)
In using the jars, you are using physical actual real dollars. Remember cash? That colourful paper stuff that used to line our wallets before chip cards and ApplePay took over? For me, making the transition away from plastic helped me to better understand the value of a dollar and be more mindful of where my hard-earned coin was going.
Once you set your budget, you will likely need to tweak things over the first few months as you get a better handle on spending with this new system. For me, I found I started spending much less once I switched over to cash. What a lovely surprise! I love to eat out with friends and I love to travel. So I make concessions in other areas to be able to dine socially more and to set aside more money each month specifically for travel.
What are you hoping to achieve with this system? How is it working for you? Drop a note in the comments to keep me in the loop.
Wishing you much success!