5 Ways to Master Your Money

Managing our money is like going to the gym.  We know we should do it, we know it’s good for us.  But it’s easy to put things off to another day, and then another… you get where this is going. Just like feeling those sore muscles after a great lifting session, tackling money now will help you reap many benefits, beyond just dividends in the future. Keep reading for some insight on how you can change your relationship with money from one you avoid, to one that makes you feel empowered.

master your money

1. Track your money without judgement.

Track every dollar earned and every dollar spent for five weeks. This is to ensure you are capturing more of those “one-off expenses.”  The purpose of this is to get a better understanding of what’s going on in your head versus what you are actually doing — it’s about awareness.

The purpose of this exercise is to find out where your hard earned dollars are going. It’s important you don’t place judgement on the numbers, simply write them down. Too busy? Commit to paying for everything with a card (credit or debit), and after the five weeks you can download all the transactions.

2. Rate spending by value-added.

Looking back over the list from the past five weeks, rate how much each expense added value to your life and well-being. Now also do this for the money coming in.

You are looking for patterns to know where to cut. This goes beyond the basic advice of cutting out your morning coffee (to be real, that doesn’t work for me, I can’t give up my lattes). For repeat purchases, maybe the first one brings you a little boost in happiness, but after the third or fourth, is it even a treat anymore? If you’ve hit diminishing returns, it’s probably time to just pocket the money instead.

Same goes for money earned. Sometimes we get wrapped up on smaller sales or handholding problematic clients. We want to provide superior service, but the margin we get isn’t paying the rent. It’s the 20% of clients that brings in 80% of the revenue we should be spending our time and attention on. And our time is money.

3. Build a better budget.

Using the insights from the first two steps, now is the perfect time to adjust or build your budget around your values and priorities. After your needs are covered, the next step is to pay yourself; set money aside for your future. Try your best to eliminate the low value spending, and allocate more to expenses that have a greater impact on you. Assign a job for each dollar. If each dollar has a job, it’ll be less likely to slip through the cracks, and be spent somewhere that doesn’t really align with your priorities.

4. Get Real with Debt.

Debt is debt. Whether it’s student loans, credit card debt, line of credit or a mortgage, the interest is costing you more than the amount printed on the statement. Interest on credit card debt over a year might add up to a trip to St Lucia. When viewed like that, was that leather jacket really worth it? Are you itching to give your kitchen a facelift? Interest over 25 years can pay for that renovation three or four times over!

You know that budget you just re-did? Try to assign more dollars to repaying any debt you currently have. Doing so will have a major impact to your financial health.

5. Shift from saving to investing.

The final step is to shift from saving to investing. Studies show that Canadian women are more likely to squirrel money away in savings and high-interest savings accounts, or in Guaranteed Investment Certificates (GICs) rather than investing. But by doing so, we are losing out to inflation and eroding our quality of life.

We have made strides in levelling the playing field in terms of leadership positions and pay equity. Now it is time for us to level the playing field in getting our share of the distribution of wealth from industry productivity gains.