Category Archives: Control Expenses

How To Reduce Your Monthly Spending

Are you not saving the amount you want each month? Or worse, are you running out of money at the end of each month? You can learn how to reduce your monthly spending with these tips.

save money

Track Your Spending

Knowledge is power. Start by tracking your spending. I track mine in a spreadsheet. Some people use mint.com.

Categorize your spending. For example, my spending falls under these categories: Food, Recurring Bills, Health, Transportation, Entertainment, and Misc.

  • Eating out, buying a coffee, and getting groceries fall under “Food”.
  • Rent or mortgage, utility bills, phone bills, and any other subscription fees fall under “Recurring Bills”.
  • Any expenses on sports activities, prescription drugs, Medical Services Plan fall under “Health”.
  • Expenses from refueling the gas tank, car insurance, and public transit fees fall under “Transportation”.
  • The “Entertainment” category is for any entertainment you do, such as going to the movies, or watching a Broadway show.
  • Anything else that doesn’t fit into the other categories, goes into “Misc”.

For each item, I record the date, amount spent, the location, and a description of the spending. Identifying which ones are necessities and which ones are wants, can help to reduce your spending. Read More

Get Your Credit Card to Work for You

When using a credit card, it can feel you aren’t using real money, and as a result you might spend more than you intended to. So, some people opt out of using credit cards altogether. However, the more important thing is to stay in control of your spending. Distinguish between needs and wants and never spend more than you earn. This way, you would never run out of money, and be able to save some and invest some.

If you will only use your credit cards to buy what you need most of the time and occasionally buy a Starbucks coffee, you should be fine. Just remember to pay in full every month. This way, you don’t lose out on the interests. I don’t know about you, but my credit card charges 21% on the interest! The market returns an average of just 10% a year.

If you’re afraid you’ll miss the payment to your credit card, you can set up an auto-payment to ensure your bill is paid automatically from your chequing account.

Using credit cards help in building your credit history. If you have a good solid history, it’ll be easier and may get better rates when you do need to get a loan (perhaps a mortgage?). You shouldn’t apply for tonnes of credit cards either. Only apply one when you need one.

Factors which Influence your Credit Score

  • payment history: 35%
  • amount of outstanding debt: 30%
  • length of credit history: 15%
  • new credit: 10%
  • types of credit used: 10%

Credit Score Rating Scale

300-559 560-659 660-724 745-759 760-900
Poor Fair Good Very good Excellent

Reference: local metro paper – 2013 issue

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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