This month at Money Coaches Canada we’ve been discussing why sticking to a budget is so hard to do, and how using our On Track Money Management system will keep you engaged and accountable to your own spending and savings plan.
A big part of our system is setting up savings accounts and setting aside amounts every month for the expenses that occur irregularly or annually, like gifts, travel, or property taxes. By saving monthly for these expenses the money should be available when you need it. This way you won’t have to rely on credit cards or your line of credit when these ‘surprise’ expenses pop up.
By having a separate account for each type of expense, you will know how much money you have available to spend in each category. It also keeps the money separate from your other spending so you don’t accidentally spend your savings on something like dining out or lattes! Clarity is key. Having several separate accounts can help you make decisions about what you can – and can’t – afford.
Clients often question the logic of setting aside money for things coming up, instead of putting everything down on their current debts and saving the interest costs. Well, there is more to managing money than just the math…
Justin Bouchard of youngandthrifty.ca does a great job of explaining some of the intangible and qualitative benefits of opening a savings account in his article, How a Savings Account Keeps You Out of Debt.
UNSTUCK – How to Get out of Your Money Rut and Start Living the Life you Want
by Karin Mizgala and Sheila Walkington
(Some excerpts from Chapter 8)