Q: My wife and I are at our whit’s ends about our finances and can’t seem to agree on anything these days. I run a business with a business partner and my wife has a great job in her field. We’ve never had trouble with money and earn enough that we should be able to afford anything we need or want, but we’re living paycheque to paycheque and stressing over how to get all of our bills paid each month. It’s affecting our health and relationships. I’ve had to take time off and my business partner is wondering what’s up. My wife’s relationship with her daughter is getting strained because we’re having trouble helping her while she’s away at university. I’m afraid things will turn into a big mess if we don’t do something quickly, but where do we start? ~Byron
A: While it may be of little comfort, recent surveys highlight that you are not alone. More Canadians are feeling overcome by their debt and financial problems than last year, including those earning higher incomes. They are going to work feeling unwell for fear of losing income, their mental health and performance at work are suffering, they aren’t able to save for emergencies, and their preoccupation with worries about money are ultimately equating to lost productivity for employers.
You have, however, taken the first step to dealing with your situation, namely admitting that you can’t keep doing the same thing over and over. It takes a lot of courage to ask for help with your money, which is unfortunately what prevents many people from getting the guidance and assistance they need. No one is born knowing how to manage their money, yet at the same time, we’re somehow expected to have it figured out by the time we’re adults; something we are not always prepared for, especially if our plans are disrupted by events beyond our control.
Identify the true source of your money problems
You can’t make choices and changes if you don’t know what you’re dealing with, so it’s crucial to identify the root cause of your money problems if you want to resolve them. Resist thinking that if you knew why you were having problems with money you would have done something about it a long time ago, because it’s not that simple. Managing money is a complex mix of the financial, emotional, and mathematical, so it takes a comprehensive approach to deal with problems when they arise.
How to identify the cause of your financial problems
Join forces with your spouse and try to identify why you’re struggling. For example, if you typically pay bills late and as a result incur costly fees or interest penalties, try to determine if you have a cash flow or a planning problem. A planning problem can often be rectified quite quickly by creating a paycheque plan and setting up electronic payment or calendar reminders to pay your bills. Being organized with your money will help you avoid ongoing financial difficulties.
Does Being Organized With Your Money Really Matter?
A cash-flow problem could indicate that you don’t live according to a realistic budget. To help address that problem, use a detailed and interactive budgeting spreadsheet to help you outline a budget that will work for you and your family. No two budgets are exactly alike, so establish one that works for you.
Consider the source of cash flow troubles to find a permanent fix
Cash-flow problems could be exacerbated by the lack of a realistic household budget, but the fix — to bring your spending in line with your income — is more involved and depends on why you have a cash flow problem.
If a cash-flow problem is due to having too many bills and debts, attempt to ascertain where your overspending comes from. Maybe you have credit card bills from a lot of impulse shopping, two expensive car loans, and a home that’s challenging to afford. Dig deep and be honest with each other. If impulsive buying is the issue, tap into the cause. It could be due to boredom, stress, or an unfulfilled need. If so, focus your efforts on finding ways to solve the boredom, alleviate the stress, and find less costly ways to fulfil your needs. This could mean becoming more intentional with your spending. It’s easier said than done, but the efforts are worthwhile.
How to Identify Your Impulse Shopping Triggers
For pricey car loans, ask yourselves why you bought the vehicles you did and how much of each vehicle is a want versus a need. Most of us try not to invest our money in ways that guarantee losses of 30 per cent over the first few years. But that is exactly what we’re doing when we buy brand new vehicles. If why you bought your vehicle doesn’t align with your current needs, consider options to bring your vehicle costs in line with your budget and your plans to get your finances back on track.
Is Always Driving a New Car Worth $4.2 Million to You?
When considering the root cause of your financial difficulties, think carefully about your home and how much you’re paying for it. Whether you own or rent, housing costs are high. From your rent or mortgage, insurance, repairs and maintenance, to strata fees and property taxes if you’re a homeowner, along with all of your utility bills, it takes a concerted effort to bring our housing costs down once we’ve committed to a certain standard of living. While downsizing or generating income with your home might ultimately be the right choice, both options come at a cost. Before taking any drastic steps, look for savings with every single one of your bills. Contact each provider and scale back your utility services to what you truly need and use. Search online for creative tips to save on household expenses and try out the ones that seem like they’ll work for you.
75 Ways to Save on Household Expenses
What to do if unexpected expenses are the cause of financial trouble
If unforeseen circumstances caused your financial problems, consider if the root cause is a longer-term problem, such as a serious health concern, a one-off situation, such as a family wedding that required expensive travel arrangements to attend, or a circumstance you actually could have anticipated, such as a large car repair bill.
When facing a longer-term situation that is impacting your finances, it can be difficult to reorganize financially, but help is available. Scale back to an emergency budget and reach out for all of the assistance you qualify for. A non-profit credit counselling organization in your area can provide guidance to help you determine how best to deal with your debts until you’re back on your feet. Services from not-for-profit credit counsellors are free of charge and not income-dependent, so regardless of your level of income, they are able to assist you with information, guidance, and options for how to deal with your debts.
A one-off situation or an expense you could have anticipated require diligent effort to resolve. Establish a reasonable plan to tackle the resulting debts as quickly as possible while at the same time planning how to avoid a similar crisis in the future. There are very few truly unexpected expenses in life; more often than not, a comprehensive budget that also sets money aside for emergencies allows us to get ahead of any curve balls life throws our way.
How to Plan for Unexpected Expenses
The bottom line on why it’s worth identifying the root cause of your money problems
Financial troubles can happen to anyone, regardless of how much or how little one earns, so it’s important not to beat yourself up by thinking your situation should or shouldn’t be a certain way. Such a reaction causes needless stress and pressure and only makes it harder to find better ways to manage your money. When looking for a different outcome, it’s important not to keep repeating the same mistakes. Be creative and look for ways to change your habits. If you’re facing tough choices, give yourself permission to grieve what could have been, and comfort yourself with the notion that the change could be just what’s needed to help you regain your financial stability.
Tips to Stay Motivated When Paying Off Debt
How to Overcome 8 Sources of Money Problems
Why Help Employees Who Are Struggling Financially?
Peta Wales is President and CEO of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Peta by email, check nomoredebts.org or call 1-888-527-8999.