THE BLOG

Do You Know Where Your Money Really Goes?

01/22/2015 05:10 EST | Updated 03/24/2015 05:59 EDT
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If you are like most of us, each and every day is full of work and family commitments that consume most of our calories. We are busy living and enjoying our lifestyle. Besides, who do you know that wants to spend their precious spare time or down time reviewing their personal finance situation? Many of us avoid it and some of us quietly wish it would just go away.

The reality is most of us have no idea where our money goes, and because of this it feels like there is never enough. Time aside, who wants to go through receipts, reconcile accounts, and figure out whether we have a shortfall or surplus of money each month? Pardon the expression but it's a bit of a lunch bag let down, don't you think? But the irony is taking control of our personal finances and allocating only one hour a week to it, has the power to make us feel more in control and confident about our personal financial situation and future. It's not much to ask, is it?

This time of year can be really difficult on our personal finances. RRSP season is just around the corner, and for many of us our holiday shopping bills have arrived and we are dumbfounded by our over-spending. We set a budget for holiday shopping but for some reason, we over extended. Some of us got really caught up in the spirit of giving, and our generosity may have back fired. We wonder how on earth we are going to pay off our bills. It's disheartening.

But before we go any further, I want to give you a quick peek into where our money goes. Let's look at the big picture and then spend time figuring out what to do next. Statistic Canada released a report on household expenditures for 2013. Canadian households on average spent $58,592 on goods and services in 2013 up 4.1 per cent from 2012. Alberta reported the highest average spending of $71,429 while PEI the least at $47,410. Not surprising couples with children spent the most or $81,636.

Just under two-thirds (62.2 per cent) of our household expenditures are for the following: shelter (28 per cent), transportation (20.6 per cent) and food (13.6 per cent). This leaves just over one-third (37.8 per cent) of our expenditures for other household items including communication, travel, entertainment, home renovations, saving and lifestyle choices. It is no surprise why we feel we never have enough. Living is expensive.

The good news is the year is only beginning and there are another 11 months to get back on track. Getting a handle on your personal finances will increase your confidence so you don't spend the year worrying about money, rather living and accomplishing your goals. Here are a few tips to get you back on track today:

• Track your spending. Time would be well spent over the next several months tracking how we spend our money. Some of us may be surprised to see where our money goes and may have to make some adjustments for the balance of the year. Set categories for yourself. Or get some help and download a free budget planner.

• Readjust your future spending plans. If you find you overspent over the holidays, readjust your spending for the balance of the year. If for example, you overspent by $500 you will have to readjust your spending to find $500 to offset your situation.

• Know and understand your triggers. Check in with your emotions, daily events, situations, and activities that might trigger spending on non-essential items. We must identify our triggers that detract us from making mindful and conscious choices with our money. Learn to manage your triggers. A bad or good mood can be a precursor to spending. As funny as it may sound, having a clear mind is important when it comes to spending money.

• Are you a spendthrift (spender) or tightwad (saver)? Some of us may be born spenders or savers. Figure out who you are and be mindful of your natural predisposition when it comes to your money. Some of us may be a spendthrift or someone who feels little pain to spend. If this is you, understand that you are vulnerable to sales and bargains. Savers have it a little easier. They feel too much pain or agony when parting with their money.

• Embrace the power of making trade-offs. Everyday we make trade offs in life and with our money. Each time we are faced with a decision, engage in the mindful act of making trade-offs. For example, when faced with a situation to spend $100 think about what you might be trading off, for example saving $100 for a vacation or buying new clothes. Be mindful of your decision making and the potential outcomes.

Food for thought. Each of us can make bite size changes in our lives and get into better financial shape. Plan ahead. Don't get caught off guard. It's that simple. Really!

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