If you started 2021 positive that this was the year you were going to plan for expenditures and not use your credit cards, you’ve made a very wise decision. Paying down debt or avoiding accumulating new debt at a time when we are not certain of seemingly anything, is probably in your best interest, pun intended. But if like me, January seems to have just flown by for you, and if your plan is not quite there yet, it’s not too late. Don’t be discouraged, grab a 2021 calendar and a pencil, and work through these six steps.
- Identify expenses: Use your calendar and our annual expenses sheet to go slowly through each month and circle any family celebrations, events and expected annual or occasional expenses. Pencil in an estimated price tag for each. For ideas on common expenses – check out our handy Annual Budget Planning Expenses Tool by clicking here.
- Do the math: Divide the total of each item you’ve price tagged by the number of pay periods between February and the “spending date”. Start a tally. For example, if you have a birthday in May and you want to have $30 for a gift, you may need to set aside $10 a month in February, March, and April if you only get paid once per month. Now, begin your tally with $10.You can leave out any expenses you already have an alternative plan to for. For example, if you plan to use a GST payment to pay for your annual vehicle plate sticker, you won’t need to save for that.
- Add up all of your tally. The total is the amount you need to set aside each month to ensure you have the money saved and there when you need it, for each expenditure you’ve identified.
- Be real. Can you afford to save that much each month? If not, go back and look through the calendar again. You may have to reduce the price tags on some items. Consider this a challenge and be creative. How can you change the cost without eliminating necessities, joy of giving or fun events. Ask family for suggestions. Brainstorm solutions so that you can still go camping in August without using credit cards. Are there other things you can give up, or ways you can earn extra? Get as close to an affordable monthly savings tally as you can.
- How will you save it? Talk to your bank. They offer a variety of tools and tips to help motivate and support saving on a regular basis. Tip: You’ll want to avoid withdrawal fees.
- Start each month with a review of your plan. Has anything changed? New expenses or cancelled events can change our saving goals. Checking in with your plan and other members of your household at the beginning of each month will help you adjust accordingly.
These 6 steps will help you get started. Note that we did not call them easy steps. Often saving for the things we really want is not easy, but with planning and effort, most things are attainable.
Need some help? Call Credit Counselling for ideas and options to help you with your 2021 financial planning.
For information on setting up a monthly budget, consumer credit issues or consolidating debt, call Credit Counseling Services of Peterborough, a program of Community Counselling & Resource Centre, a United Way funded agency. For more information, call (705) 743-2272, www.creditcounsellingptbo.com