HA! I just called myself stupid. It's okay though because I know I'm not the only one here that has this serious problem. But it's like a serious problem... Check me into rehab. Confessions of a shopaholic is right.
So here is a public announcement coming to you from the headquarters of MTL Blog: GUYS! Stop wasting your money and start investing it. No seriously. Do you know how much money you are literally putting in the garbage by buying things you don't need?!
Well incase you are living in denial and don't think you're part of this category, here are some tips to make you realize that it's not too late to change those habits, and make some better ones.
1. Record your expenses
Make a list of priorities. From most important to least important. For example, food, rent/mortgage, and transportation and definitely a must. Think of it as the Maslow Hierarchy of needs pyramid. Anything after the third basic need is a "luxury" - you do not need it, you want it.
2. Make a budget
Now set aside how much you make VS how much you spend. After you've taken out your basic needs, what is left? Now that you've figured out the first step, let's move to the next.
3. Have a goal
What is the market asking for the size of the house/condo you want, in the neighbourhood you want to live in? Once you know this, Google ‘’mortgage calculator’’ to work out how much of a monthly payment this might represent. Keep in mind that owning your own place will involve other costs you do not experience as a tenant, such as property taxes and maintenance/condo fees.
4. Set a realistic time frame
If you know by when you want to make a purchase, then it’s easier to figure out how much you need to set aside every month to make it happen. Be mindful of the CMHC premium (if your down payment is less than 20%) and of duties for transfers of immovables (better known as the ‘’taxe de Bienvenue’’). These add to the upfront costs, so you need to save for more than just a 5% down payment.
5. Don't spend on things you don't need
Living in the 21st century, most of us pay for most of our expenses with plastic. Pull up your bank and credit card statements for the last 3-4 months, and put every single item into a category (rent, clothing, going out, cell phone, restaurants, etc.). Then make totals for each category. Chances are you’re in for a shock (‘’I spent all that money on _____!?!!’’).
6. As humans we are built to adapt to any situation...or die
If you suddenly had more money every month, would you save most of it or would you spend it? Be honest!! And what if you suddenly had a bit less... would you keep spending as much or would you cut back on some of the things you don’t really need?
7. Start paying YOURSELF first
Say you’ve got two persons, who earn the same amount of money from their job. Person A gets their paycheck, spends it, and saves whatever is left over. Person B gets their paycheck, immediately sets aside part of it in a separate account (this can be done automatically), and spends the rest. Who do you think saves more? Paying yourself first is the key to saving your monthly target, EVERY month.
8. Time is valuable - don't waste it
Some of you might be thinking ‘’why save all this money for tomorrow? I might be dead by then! I want to enjoy life NOW...’’ Recent studies have shown that the biggest determinant of happiness is the quality and intimacy of our close personal relationships – not the useless crap we spend money on!
9. Shop around for the best savings account catered to your specific needs
You should have three savings account ideally. One, that takes money out of your pay check weekly or bi weekly and goes into a "emergency savings account" for unexpected payments/expenses. The second should be a locked account that you don't see or have access to, here you are saving for a FUTURE goal. (Wedding, property, um the future...) and third should be a retirement account.
10. Baby steps is still a step forward
Remember that even saving $50 a week will get you $2,600 at the end of the year. Don't get discouraged looking at the big number and thinking you cannot attain it. Time and patience is everything. As you as you remain consistent you will get there.
BONUS Tip: Talk to a professional
A financial security advisor can help you turn all these good intentions into real action towards reaching your goal. They can also add a whole lot of meat to this bare-bones outline. They usually won’t even charge you for the advice!
On a side note, the median Montrealer earned $42,052 before taxes in 2010. Over a 40-year career, that adds up to nearly $1.7M (that's not counting inflation) An advisor can help you make the most out of your money. If you don’t currently have one, you can ask your friends and family if they have one they like. Otherwise, send an e-mail to a Montreal expert, and Financial Security Advisor: Mathieu.firstname.lastname@example.org.