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November 30-day Financial Wellness Challenge
Click on today's date to find out more about the daily challenge!
Feeling stressed about your finances? Has your debt got you down? Join our 30-day Financial Wellness Challenge to kick your bottom line into shape. Our four weekly challenges – the Budget Breather, the Debt Detox, the Spending Cleanse and the Saving Steppers – will help you shed some bad habits and learn some new ones to put you on the path to financial wellness. Plus, you have a chance to win prizes! Join now! The challenge starts on Nov. 5! #SpendSmartFCNB.
Only three more days to go before our Budget Breather begins! In the meantime, sign up to receive updates on financial and consumer information as well as fraud alerts about the latest scams targeting New Brunswickers.
Your first challenge is to invite your friends on social media to join you in the 30-day Financial Wellness Challenge, which kicks off on Nov. 5 with our Budget Breather. Tag them and use the hashtag #SpendSmartFCNB.
Tomorrow, our first weekly challenge begins. Spend today testing your financial literacy in a fun way! Sign up for Fortune, FCNB’s online trivia game, to answer daily trivia questions and compete against players across the province.
Let’s look at creating a budget to get you on track toward your financial wellness goals. According to a report by the Financial Consumer Agency of Canada, only 46 per cent of Canadians have a budget. People tend think having a budget means losing out or sacrificing everything to get ahead.
We need to change our mindset around budgets. Think of them as a tool you can use to get the things you want in life. A well-balanced budget allows room for the things you love. Knowing where you spend your money daily will help you determine what is important, what you spend your money on, and what you are willing to change to afford the things you want. Examining your spending on a daily, weekly and monthly basis will allow you to see where you can save money, how you can cut costs, and even find money that you didn’t know you had. It will make you aware of habitual spending, like constantly ordering items on Amazon Prime or downloading books for your Kobo. A recent poll revealed that a whopping 82 per centof Canadians admit they could cut back each month by an average $360 “before feeling the pinch.”
The challenge this week is to create a budget that you can stick to. You can download FCNB’s Build a Budget That Works workbook as well as our Monthly Budget Excel document to help you get started. Our daily tips will also help you with your budget by finding savings that you might not have considered.
Have an honest look at how much TV you’re watching. Do you really watch all those specialty movie, sports and home improvement channels? Your cable or satellite provider might be able to customize a package that is more economical for your viewing needs.
Look at your gym membership. Are you using it? If you haven’t used it in the last three months, either start going or cancel it. You might want to consider alternatives, like free workouts on YouTube or walking or running. If you really love the gym, see if your employer offers discounted gym memberships or covers fitness activities as a perk.
Look at your data usage. With no contracts now and the ability to unlock phones, you may be able to get a lower monthly bill by switching to another plan or provider. Make sure that all the features, plans and services you are paying for are bringing you value. Do you pay for a landline, but don’t even have a phone plugged into the wall? Maybe it’s time to cut that cord too!
Sometimes if we see $500 in our bank account, we think we have money to splurge, not realizing last month’s cell phone bill will be coming in two days. To avoid this, tell your money where to go every payday: pay all your bills first, then put money on your debt, and move the rest to other accounts, such as a savings account or retirement fund. Also, put some aside for a weekly spending allowance so you can have some fun while still making sure your bills are paid. By giving every dollar a home, you’re less likely to spend away your entire paycheque.
Congratulations!Now you have a monthly budget you can work with! Remember to come back and review your budget each month. Budgets change and yours should be flexible enough to accommodate things like summer vacation and holiday seasons, when your spending habits will likely change. But don’t stop there! Why not create a financial plan for the year? This is where a financial professional might be able to help. Download our Five Steps to Choosing an Advisor worksheet to help you find a financial professional that is right for you.
Just like you follow a fitness plan to tone up or lose a few extra pounds, you need to create and follow a plan to be debt-free. The latest Canadian figures show that the average household debt, including mortgages, is 173% of disposable income. In other words, for every $1.00 we earn, we spend $1.73! That makes our debt-to-income ratio among the highest in the world, according to the Organization for Economic Co-operation and Development.
If you feel stressed about your debt level, know that you are not alone. Nearly 45 per cent of working Atlantic Canadians feel overwhelmed by their level of debt, according to a 2018 Canadian Payroll Association survey.
But not all debt should keep you up at night. There are good debts and bad debts. Good debts are investments that grow in value or generate income, like a mortgage for a home or a student loan to pay for your education. Bad debt is when you purchase an item on credit that quickly loses its values, like that big-screen TV.
Still, most debt is extra financial weight you do not need. Instead of becoming overwhelmed, become proactive and create a financial plan to tackle your bad debt. This week’s challenge is to create a plan. Our daily tips will help you.
You may include car loans, credit card balances, line of credit balances, loans (such as payday loans, and loans from financial institutions, friends and family), taxes you owe, overdue utility bills (like cell phone, power bills, cable). For each one, list:
There are two national credit reporting agencies in Canada: Equifax Canada and TransUnion Canada. You should check with both agencies. They must provide you with a report once per calendar year at no charge. However, they may charge a fee for additional reports or information. You can find out more about credit reports here.
Take a look at your list of debts from Day 1 and the interest rates for each one. You might be able to negotiate a lower rate through your lender. But first shop for lower interest rates from other credit card companies or lenders, like credit unions or banks. Armed with these competitive rates and your credit score (see yesterday’s tip), call the customer service number for each account and negotiate. You can find more information here.
Here are five steps to setting your debt-free goal.
First, make your goal a SMART one. A SMART goal stands for specific, measurable, attainable, relevant and time-bound. Saying your goal is to be debt free doesn’t cut it. Instead, your goal could be to pay off your $12,000 car loan by January 2020. The goal is specific and includes an exact, measurable amount and an end date. Stating your goals this way will help motivate you and keep you on track. But make sure you are reasonable with your time frame. If you set too ambitious a goal, you may set yourself up to fail.
Second, make a plan to reach your goal. Determine the total amount of money you can put toward your debt repayment each month. The amount of time it will take to become debt free depends on the amount of money you can afford to put toward your debts. The more you can pay, the sooner you will be out of debt. This amount should cover both your minimum payments for all your debts as well as an extra amount of money to put toward your payments. Here’s a debt calculator that can help with this. You may need to adjust your timeline to be debt free based on how much you can afford each month.
Third, envision what being debt free will mean to you. Maybe it means having extra money to go on a vacation or saving for a down payment on a house. Focusing on the day you are debt-free and what being debt-free means to you can be more motivating than focusing on the debt reduction itself.
Fourth, consider what will happen if or when interest rates go up. A hike in interest rates could affect your monthly mortgage payment or any lines of credit with variable interest rates. This could impact your debt repayment plan. Be flexible and check on your plan regularly to make sure you’re on track.
Lastly, stay motivated by tracking your debt progress. Just like losing five pounds can motivate you to stay on your fitness plan, seeing your balances go down can keep you on track with your debt detox. Reward yourself when you hit certain milestones. For example, when you reach your halfway point or pay off a credit card, treat yourself to a night out (just don’t pay for it with credit!).
Look around your house, in your closets and in your storage areas. Do you have items you no longer use or need? Sell them to make some extra money to pay down your debts. Or consider taking a part-time job to make some extra cash. Use the pay cheque from this second job to pay down your debt faster.
Avalanche (Paying off your most expensive debts first): List your debts in order of highest to lowest interest rate. Make the minimum payment on each, and use the extra debt payment money you found on Days 4 and 5 to pay down the debt with the highest interest rate first. Once it’s paid off, take all that money that you were paying on the first debt (the minimum payment and the extra debt payment) and put it toward the second debt on your list. Continue as you pay down each of your debts, leaving your least expensive debt to pay down last.
Pros: You’ll pay less interest overall. This will help you become debt-free sooner.
Cons: It can be harder to stay motivated if you don’t see quick progress. This strategy won’t work well if you become demotivated and skip the extra payments.
Snowball (Paying off your smallest debts first): List your debts in order from the smallest balance to the largest. Make the minimum payments on each and use the extra debt payment money you found on Days 4 and 5 to pay down the debt with the smallest balance first. Once it’s paid off, take all that money you were paying on the smallest debt (minimum payment and extra debt payment money) and use it to start paying off the second one on your list. Continue this method as you pay off each one of your debts.
Pros: You see progress quickly, which can keep you more motivated to stick to your plan.
Cons: It can end up taking longer or costing you more if you have large debts with high interest rates.
Once you have a debt paid off, consider closing that account. When choosing which accounts to close, consider:
Keeping the oldest account (as your credit score is based partially on how long you have had credit).
How much credit do you really need and what could you comfortably pay off?
Are there alternatives to taking on debt?
Payday loans often carry the highest interest rates of any debts you may owe followed by credit cards. (Learn how payday loans work and alternatives to payday loans.)
To avoid more debt, remove your credit card from your wallet and put it in a safe place. Only use cash or your debit card to make purchases for the rest of the month. That way, you’ll spend money you already have. Don’t use your credit card until you have reached your debt payment goal.
A spending cleanse is about resetting your money habits. After all, we are creatures of habit. When we’re stressed, bored or unhappy, we tend to spend, which can make us feel guilty. And so it becomes a vicious cycle. According to a 2018 poll by the Canadian Payroll Association, 49 per cent of Atlantic Canadians live paycheque to paycheque. It also indicated that the same percentage spend ALL or MORE of their net pay!
Like a health cleanse, a spending cleanse is about resetting and taking a step back. It’s about becoming more aware of our spending habits. It’s about being intentional about our purchases, spending smarter and enhancing our financial wellbeing. Start your spending cleanse today!
People love to monitor and track progress toward their physical goals, which is why wearable devices are so popular. Why not do the same with your financial goals? Just like people who keep daily food journals lose twice as much weight, people who track their spending often have less debt. This week, write down everything – and I mean everything – that you’re spending money on each day: from filling your car with gas to buying a coffee or going out to dinner. You need to see where your money actually goes. Keep a notepad in your purse or download a spending tracker app on your phone. Many are free. Watch this video to motivate you! On Day 7, review your spending journal.
Your values, or what you consider most important in life, drive almost every financial decision you make -- things like happiness, health, freedom or security. Here are some examples of what people have been telling us about how they spend money based on their values. Today, write down your values and what you want your money to help you achieve. Maybe your financial goal is to pay off your line of credit by the end of the year. Maybe it’s to invest $2,000 for your future. Maybe it’s to take a family vacation. Having financial goals will give you incentive to stick with this money workout and rein in your spending. Knowing your “why” will help motivate you, and may help you see you that you can kick some of your “spending cravings” after all. Today, post your goals somewhere visible to remind you of what to aim for. Set some short-term goals too, like eating out two fewer times a month or using only cash for three weeks. These short-term goals will keep you motivated.
You’re midway through tracking your spending for the week. Today, why not challenge yourself to a no spend day? Don’t forego your groceries if your cupboards are bare (food is a need versus a want), but see if you can avoid hauling out your wallet for any other spending. A no-spend day can make you more mindful of your spending triggers and help you to say no to wants versus needs.
People who want to lose weight often prepare a meal plan. In the same way, create a spending plan before making purchases. It can be as simple as making a shopping list before going to the grocery store today. A grocery list will help you stick to what you need and avoid impulse buying. It keeps your purchases intentional. Only bring the cash you need. If you are considering a bigger purchase, check out these tips to becoming a smart spender.
It’s seems like an obvious tip, but consider this: An average lunchtime meal costs $10. If you packed a lunch from home, it might cost you $4. That’s a $6 saving. If you brown bagged it three times a week, that’s a monthly savings of $72. Over a year, you would save $764! If you packed your lunch every weekday, you would save $30 a week, $120 a month and almost $1,500 in a year! That could pay for a one-week vacation to the Caribbean or significantly pay off one of your debts.
FOMO, the Fear of Missing Out, is the physical and emotional reaction we have when we feel that we are missing out on an opportunity. It can make us feel unsatisfied with the experiences we have had and the things we own. Thanks to social media, we are always reminded of just how much we are missing out. FOMO may prompt us to overspend to compensate. Read these tips to keep FOMO at bay and your credit card balance under control. If you have fallen for FOMO, you may have experienced buyer’s remorse − the feeling of regret after making a purchase. The feeling could hit immediately, or it could happen after you have the item home. Ask yourself these questions before you make a purchase.
Look at your spending journal for the week. Highlight everything that is NOT an essential expense (Your mortgage or rent are essential bills that must be paid). Highlight other items – like that latte, even if it feels essential at 3 p.m. Then pick three items from the highlighted list and cross them off. Eliminate them for one week. Just like you eliminate sugar on a food detox, eliminate some of your habitual spending. For most people, this single step will save hundreds of dollars over the course of a year. Remember how we could save $764 if we packed our lunch three times a week for a year (see Day 5). Think of the savings for three items you’ve crossed from your list! Here’s a video to inspire you to reduce your spending.