10 simple money management tips

Does having a sense of financial security – where personal finances feel under control – seem unattainable? It may not have to be that way. While money certainly doesn’t grow on trees, there are small steps you can take that may help you increase the amount you have.

Consider the following 10 money management tips. Applying one or two of them may help you grow the size of your bank account. While changing day-to-day spending (or saving) behaviour can be a challenge, you may find that these strategies can help.

Start by writing down and adding up everything you spend each month, including smaller purchases (yes, even those coffees 'on-the-go'). Next, write down all of the money that comes in each month (i.e., income).

Income can include things like salary, bonuses, support payments, financial gifts, and more. Expenses can include everything from what you spend at your corner convenience store to larger costs, like rent or a mortgage payment, utilities, hydro, groceries, transportation, digital services (e.g., cell phones, internet, television), and more.

If your total income turns out to be less than your total monthly expenses, that means, to maintain your current lifestyle, you’re gradually going into debt. Unfortunately, debt-carrying costs is another expense and can quickly devour precious financial resources. You may want to take the opportunity to look at your spending habits, the goal being to find ways to either reduce your expenses, or increase your income to cover the difference (e.g., take on a side gig).

Writing everything down and getting a real-world picture of  your finances is the hard part. But, by going through a comprehensive budgeting process, you'll have a better picture of where you stand, which helps if you want to start to truly tackle your personal money management activities.

Small expenses each day can really add up. Could you eliminate some of those takeout meals? Tweak your digital services to pay only for what you really use? Buy a monthly pass, instead of paying as you go? Making small changes to daily spending habits can really help save money, a little at a time.

Paying your bills on time is an easy way to avoid getting charged late fees, interest charges or penalties. To avoid those charges, make note of monthly due dates for recurring bills. Then, set reminders a week in advance to be sure to pay them on time. To meet due dates, allow extra business days for your funds to travel from your bank account to the payee’s account.

Do you have a list of things you'd love to do, if only you had enough money to make them happen? By saving regularly  – paying yourself first as money comes in – you may be able to do so sooner than you think. Simply make a habit of saving a certain amount (e.g., 10 per cent) of any money that comes in, and deposit it into a separate savings account. Those small amounts can add up over time, and once they grow enough, you can use them to start striking items off that list. 

There’s nothing wrong with looking for ways to reduce your income tax bill when you file your income tax return each year. Tax savings in Canada are based on the income tax bracket each one of us is in (and spouses too, if applicable). Certain allowed expenses can be deducted from gross income. So, throughout the year, be sure to track allowed expenses, and include them when you file your annual tax return.

Allowed expenses could include things like child care costs, medical expenses, and charitable donations. Consider consulting with a financial advisor as they may help you understand your particular financial position, identify tax savings, and advise you on how you can best manage your money, and minimize income taxes payable.

Many of our daily activities now require us to go online. Doing things digitally can save us both time and money, good things to save when it comes to managing money. For example, it’s easy to transfer money online from a chequing account to an online savings bank account (i.e., remember about 'pay yourself first' idea?). Also, digital banking makes managing money easier because, whenever it’s convenient for you to do some banking (i.e., 24/7), you can:

• Set up payment reminders, so you don’t miss any due dates
• Schedule future payments, so a bill gets paid automatically
• Review spending: Digital tools can help identify trends in your spending

As an employee, you may have access to group retirement plans, including employer matching programs. Maximizing those plans can help you save, build resources and reduce taxes. Be sure to check with your employer’s human resources department to learn more about these potential options. Group plans can also help with out-of-pocket expenses with flexible spending accounts and health benefits.

With tax-advantaged programs or investments (e.g., RRSP, TFSA), retirement savings have an optimal chance to grow over time while being sheltered from tax. If possible, also consider contributing enough money to top up any guaranteed government income sources, such as the Canada Pension Plan (CPP).