With the holiday season behind them and New Years’ resolutions in full swing, many Canadians are turning their attention to creating budgets and rebuilding savings after weeks of increased spending. Chris Hotton, instructor, School of Business at Lethbridge Polytechnic says small, practical choices can help households recover financially while maintaining everyday comforts.
“After the holidays, it’s common for people to feel stressed and feel the need to catch up financially,” says Hotton. “By taking stock of past spending, planning ahead and prioritizing essentials, you can regain control without feeling compromised.”
The first step, Hotton says, is to review your finances and see where your money went. By categorizing expenses – such as groceries, utilities, transportation and discretionary spending – you can create a realistic monthly budget and establish a surplus.
“Start your budget with recurring bills and day-to-day needs, then look to discretionary costs for places to trim back.”
Once a surplus has been established, Hotton explains step two is to manage your debt sustainably.
“Many people will tell you how to pay off your debt, but the best way is to find what works for you,” Hotton says. “Paying down debt, even in small amounts, reduces interest charges and gives a sense of financial relief. These actions can give you time to analyze, reflect and create a plan to address spending habits.”
Step three is to set realistic savings and investment goals, building your financial security.
“Building an emergency fund can prevent stress from unexpected expenses and support better spending habits throughout the year,” Hotton adds. “Investments are also beneficial for accomplishing goals, such as purchasing a home, vacations, or even next years’ holiday budget.”
Hotton concludes that in financial success, your most powerful tool is time.
“Saving and investing, even in small amounts, is much better than waiting for more financial flexibility,” he explains. “Interest goes both ways; accruing interest, even on small amounts, is key and time is on your side.”