With interest rates continuing to be low and the cost of living high, Canadians keep borrowing more and more money. The most recent statistics show that for every dollar we earn, we owe $1.67. Talk about fighting a losing battle!
Part of the problem is that for the most part, incomes are not growing at a rapid pace. According to the latest data from Statistics Canada, incomes have climbed slightly, but when you adjust them in relation to rising inflation, the growth is negligible. What that means is that your purchasing power diminishes and those dollars don’t stretch like they used to. The problem is that, instead of cutting back to compensate, Canadians are charging it instead and need to learn how to spend within your means.
“Instead of continuing to accumulate debt to fill in the gaps in your household spending, it is essential for indebted Canadians to find other ways to make ends meet,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
In order to accomplish this, you need to spend within your means. Here are some tips on how to get back on track.
Let your budget rule
“Your budget is not a suggestion as to how much you are able to spend. It literally is the framework of the boundaries around your spending that you need to abide by in order to spend within your means,” says Schwartz.
You need to embrace and fully understand the importance of setting a budget and living it in detail daily. It’s a commitment, but it is worth it.
If you’ve been consistently spending beyond your means, chances are you are going to have to make some sacrifices in order to get back on track. Prioritize your spending for needs and wants. When you’ve got your needs identified (clothing, food, shelter etc.) see if there are ways in which you can cut back on that spending. That’s how you make room for the wants. And if there is no extra money to pay for the extras in cash, you put them to the side for the short term. Your cash flow will thank you.
Match your lifestyle to your budget
Bottom line, you’ve got to spend less than you make. If you are living beyond your means, maybe it is time to simplify. Do you really want a large detached home, but your budget suggests that a smaller housing type, like a condominium or townhouse would be a smarter buy, based on your income? Would you love to have two cars in your family, but your budget only lets you afford one (or none)?
You’ve got to adopt the lifestyle that your income permits, not the one that leveraging yourself with debt lets you get into in the short term. The long term financial implications can be irreversibly damaging.
Engage in behaviour to stop spending
Be mindful around your spending and recognize that the act of purchasing involves making a choice, each and every time. You can either choose to follow your budget or not.
When you are about to purchase, practice pausing. Before you buy, consider how this purchase is going to impact you in the moment and in the days to come. Does it make you feel good? Does it serve an actual purpose? Will it impact your relationships? Will it improve your own life or it is really just going to serve as a barrier to you getting out of debt?
Think of choosing to spend outside of your budget as a step backwards every time- away from your goal.
Has your debt load grown to the point where it is getting hard to stay above water? It’s time to take charge of your debt and of your life at the same time. Call one of our trained credit counsellors at or get started with our online debt analysis.