Finding ways to save money is something many Albertans struggle with every single day. According to a BMO Household Savings Report, released in Calgary, the average Canadian plans to save just under $10,000 per year. Now that we’re over halfway through 2016, where are you at with your savings goals?
One way to save that can provide a challenge, while keeping financial success in the picture, is a “spending diet”. Within a spending diet, participants are only allowed to make essential purchases or needs (i.e. rent, groceries, gas, and electricity). All other purchases will be eliminated for the time period chosen. Most often, spending diet challenges conclude after 30-days of eliminating “wants” from their expenses.
A main purpose of this challenge is to see where you can cut back in areas of your current budget, to ensure you are capable of living within your means.
There are only a few things to know before taking part in your personal “spending diet” challenge.
1) Plan ahead
Before you go forward with the spending diet, choose a timeline that works best with you. If you are going on vacation halfway through your challenge, it may be best to save the spending diet for your return home. Try to set yourself up for success by meal-planning, carpooling, or setting bills to automatic payments. This experiment can be effortless if you are prepared.
2) Set goals
Choose your timeline, and decide what you would like to gain from this experience. If you are challenging yourself to save a certain amount of money this month, or would simply like to put more cash flow towards debt repayment, providing yourself with motivation is an important step.
3) Decide where to restrict
Restricting yourself from spending can be difficult. Make yourself a list of needs, such as shelter, food, and transportation. Re-evaluating where your money goes is very valuable when it comes to beginning and ending a spending diet challenge. Within your needs, figure out whether it is possible to reduce costs even further.
4) Stop spending money
Once you have a plan, a timeline, and goals, you can start. It’s easy to say “stop spending money”, but to actually do so can be a challenge. If you are struggling, find a way to hold yourself accountable. Whether you have a buddy along for the ride, or you put some sort of penalty in place for slips, push yourself through for the feeling of accomplishment.
5) Save, save, save!
At Money Mentors, we encourage all of our clients to engage themselves in financial literacy based activities. Teaching yourself the basics of spending, saving, and budgeting are some of the most valuable life lessons you will surely need.
Money Mentors is the only Alberta-based, not-for-profit credit counselling agency. Through a number of services, we help families and individuals recover from financial crisis and move forward. From credit counselling and money coaching to retirement planning and community financial literacy, we are contributing to a healthier financial future for the entire province.