Overspending and Managing Money (MNP 3 Minute Debt Break)

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verspending remains a significant factor leading many Canadians into financial troubles. The rise of credit card usage over cash and the lack of budgeting only continues to make the problem worse. Having healthy financial practices depends on controlling spending habits like efficient expense management, reducing redundant expenses, and clearing credit card dues. If you find yourself struggling with debt or edging towards it with every credit card swipe, consider some of these tips!

First… try mapping out your financial goals and envision your financial aspirations. Sit down and really understand your current status and see how it measures against your vision. This comparison lays the groundwork for setting short and long-term objectives.

Then, adopt the SMART goal-setting approach: Specific, Measurable, Achievable, Realistic, and Time-bound. If you have a moderate amount of debt, a potential SMART goal might be clearing 70% of the debt within six months to a year. After defining your goals and the methods to achieve them, document them. Regularly review and celebrate achieved milestones before moving onto the next goal.

Budgeting is always a strategic money management plan. Depending on your financial inflows and outflows, set a weekly, bi-weekly, or monthly budget. Ensure it's feasible and can adapt to changing financial situations.

By budgeting, you not only move closer to your goals but also gain comprehensive insights into your spending. Such insights empower you to make informed decisions, like whether to reduce or completely cut certain expenditures.

Another important tip to reduce overspending is to prioritize saving. Setting aside a portion of your earnings is very important. Establish an emergency fund and allocate a percentage of your income to it each month. This practice will be a financial cushion during unforeseen expenses like home or vehicle repairs. When you save, especially in investment accounts offering returns, you benefit from compound interest over time. Savings enhances financial habits and can solidify your financial base.

As we mentioned at the beginning, credit card spending can be a quick way to get into financial trouble and it’s important to minimize credit card debt. It's essential to clear your balance monthly. Try to choose cash payments for day-to-day necessities like food and clothing. And if you do get into a severe debt scenario… consult professionals like a Licensed Insolvency Trustee. They can provide guidance on steps like consumer proposals or bankruptcy. 

Committing to financial practicality begins with understanding your expenditures. If, however, you’ve found yourself overwhelmed by debt due to overspending, MNP Debt can help you find the right solution. Contact us for a free, no obligation, confidential consultation to find a Life-Changing Debt Solution that fits your unique situation.

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