Money Management Tips for Financially Challenging Times
One in four Canadians can’t afford an unexpected expense of $500. This alarming news comes from the latest Canadian Social Survey on Quality of Life and Cost of Living from Statistics Canada. Even more Canadians difficulty meeting their household’s financial needs in 2022, and nearly half (44%) were worried about their ability to afford housing or rent.
These results paint a stark picture of the financial landscape of this country. Between a rise in interest rates, ongoing threats of a recession on the horizon, and lingering effects of the pandemic, we’re living in financially trying times.
Following these money management tips can help you handle these challenges head on with greater confidence.
Know How to Handle a $500 Expense Today
Right away, let’s focus on how you can become more comfortable handling the unexpected in life. A surprise $500 charge isn’t unusual if you own a car or home. You can face these bills with sudden damage that requires repairs.
In a pinch, you can rely on emergency loans to cover this $500. You can find many different kinds of emergency loans available online — from installment loans to lines of credit.
Choose the borrowing style that best fits your needs and lifestyle, paying close attention to repayment. You need to be able to cover your scheduled payments, otherwise you aren’t solving your unexpected financial issue — you’re delaying it.
Create a Budget
Knowing whether you can afford the cost of borrowing is easier when you have a budget. This spending plan helps you track your expenses against your income to ensure you have enough cash to go around for important things. You can check if an emergency loan is affordable by dropping it into your plan and seeing what it does to your cash flow.
While a budget of any kind may be valuable, the most useful plans help you identify spending limits for important categories. Comparing your income and expenses to the 50/30/20 rule, for example, gives you an idea of two critical things:
- Do you earn enough to match the recommend spending limits on the big 3 categories (needs, wants, and savings)?
- Are you spending more than you should on your wants?
Set up an Emergency Fund
No budget is complete without an emergency fund. Once it’s up and running, you can stop relying on a line of credit or installment loan in every emergency. You can dip into these funds to cover your next unexpected $500 expense.
How do you save $500? For most of us, an emergency fund comes into fruition from many small contributions. You can save that much by this time next year simply by saving $41 every month.
When times are tough, buying new furniture, updating your wardrobe, or booking weekend getaways aren’t the best use of your funds. You need to think proactively about sheltering your money until the country escapes these challenging financial times.
Start by cutting back on unnecessary spending before looking for more drastic ways to cut back on your essentials. You may also want to investigate ways to beef up your income with a side gig or new job.
If that isn’t enough to make ends meet, start contacting your bank, mortgage company, and credit card companies to ask them about any financial assistance programs they offer. You can also sign up for free credit counselling to improve your money management skills.
Money management can help you prepare for financial challenges in your future, so don’t sleep on these tips!