Overspending continually even by small amounts over time will dent your net worth.
According to an RBC Economics report, Canadians will be borrowing and spending more in 2021.
I don’t know if you check your net worth monthly as we do but that’s our motivation.
How many of you have those moments of making a purchase out of curiosity?
It looks good on the model, maybe it will look even better on me.
Those Nike runners are cool, I need to buy them.
When shopping online perhaps customer reviews make the decision for you?
Twelve thousand reviews and a 4.8 star rating you can’t go wrong, right?
Whether shopping brick and mortar or online shopping overspending can significantly impact your debt to income ratio.
Today, I want to chat about the impact of debt on Canadians especially during times of uncertainty.
- The influences of overspending
- How overspending impacts your net worth
- Why spending too much money ruins your budget
- What solutions there are for overspending problems
Overspending Problems You Didn’t Know You Had
The impact of debt on Canadians is not just tough it can be downright depressing.
Oddly enough debt can cause depression and lack of financial motivation.
What is financial motivation?
It’s that stimulus to finally put a master financial plan together before it’s too late.
Being tight with your money is not a bad thing but being too loose plows people into debt.
Failing and continuing to improve is better than throwing your hands up and hoping for the best.
It’s easier to give up on something that can cause happiness and risk day-by-day that money problems get better on their own.
By this, I mean dealing with debt collectors, eviction notices, repossessions, mental health, homelessness, and potential relationship breakdown.
That’s just scratching the surface of what spending more than you earn can do.
I’m sure someone who reads this can tell us about bankruptcy, consumer proposal and the sleepless nights.
It doesn’t have to be that way.
As well, allowing children in on money problems and fighting can affect them mentally.
Have you ever felt the need to be a part of the solution if your parents fought about money?
Well, that’s how it is and for children who can’t or don’t understand the impact will be long-lasting.
Influences Of Overspending
There are influences that cause people to spend more money than they have.
The only suggestion I have for you is to avoid these triggers if you are easily convinced you need something.
- Friends and Family encourage you to spend money or buy something
- Deals that appear as text messages on your phone
- Smells in a store attract you to products that are being marketed. (coffee smell dispenser to buy coffee) it’s true!
- Deals that come to your email from stores, commercials, and ads that talk to you.
- Credit cards and loans with low-interest rates that you don’t need
- Online shopping when you don’t need anything
- Shopping because you are bored
- Coupons for products you won’t use but purchase just in case you do
- Trying to look rich when you are not is a sure-fire way to get yourself into a mess of debt
There is one last thing I do want to say about online or in-store shopping.
Check for online discount codes, deals, coupons, coupon codes, and use rewards cards. They are worth using when you do budget for purchases or even if you don’t but a good deal popped up with a coupon code.
I even created a massive list of Canadian Deals and Discounts and more so it’s handy for my readers.
What I’m trying to say is to use the available savings that these stores are pushing.
Don’t leave money on the table or say you don’t know how to use them.
It’s super easy with Rakuten Canada being our biggest savings wheel thus far.
On that note, I could go on because with technology everyone is a target even while you’re doing a chore such as grocery shopping.
Stay focused and be aware of your influences and triggers and avoid them for the win!
What other influences can you think of? Share them below.
Why Spending Too Much Smashes A Budget
You already know that overspending will cause a budget to laugh back at you.
Being naughty with your money means that you didn’t achieve your goals.
Do you know why? If not it’s best to investigate and work out ways to make sure it doesn’t happen again.
It will though, because life happens so don’t sweat it just plan better where you can.
Perhaps you didn’t meet your savings goals because you failed to plan your budget correctly.
One other aspect that comes to mind is maybe you don’t quite understand how to budget correctly and need some help.
We’ve all been there so don’t be afraid to research or ask for help from people that you trust.
Please don’t ask anyone who is failing at budgeting themselves for tips either.
Big mistake. Find successful people in the financial world who can lead you down the path to reach your success.
Simple Solutions To STOP Overspending
I know you’re probably thinking the obvious, stop spending and you’re right.
However, even though the answer is plain and simple people fail to correlate spending with debt.
Budget Your Overspending Habits Away
The second most obvious way to put the brakes on overspending is to use a budget.
This is why I created the Free CBB Excel Budget Spreadsheet so that my readers could jump right in.
The excel budget is simple to use and I’ve made notes for each section to explain what it’s about.
There are also options available to those who don’t care for spreadsheets.
I also offer a free printable monthly budget that you can customize before you download and print.
Stop wasting your money on apps and buying budgeting software or other bloggers budgets.
Honestly, it’s a waste of money that you can invest and make even more money from.
All we do is save our receipts, record them and make sure that we are not spending more than we earn.
By investing in doing the budget in a spreadsheet or on paper allows the user to understand what is happening.
It’s kind of like someone reading a book to you versus you reading the book.
I find if I read the book I retain more of the information which allows decision making easier.
All you have to do to get my free budgeting resources is tell me where to email it to you.
You can do that by subscribing to the blog which will give you access to the resource library.
It’s that easy and you get to join our community of financial friends from all over the world.
What else can you think of that would stop someone from overspending?
Talking Works To Help Reduce Overspending Problems
What about communicating with your partner or spouse?
Money fights are huge in some relationships especially when money gets spent and is hidden or not discussed.
Both Mrs. CBB and I talk about what we are spending our money on and why it is needed.
It’s a simple discussion we have over a cup of coffee in the morning (maybe with a brownie, lol) or before bed.
Creating a financial plan that includes emergency savings is also important.
There are times where both credit cards and loans are essential but failing to plan can create debt.
Prepare A Financial Plan That Includes Freedom Not Stuff
I took the slow route to earn money with Canadian Budget Binder which brings in a nice 5-figure income.
As the blog grows I hope to earn even more which will help us to save more and invest in renovating our home without touching our savings.
One day I’ll write about How To Start A Blog and explain everything I’ve been through so you don’t make the same mistakes as I did.
I read a quote on Instagram that caught my attention that I want to share.
A Range Rover isn’t a status symbol if you have to drive it to a job you hate. Wealth is not owning cars, watches, houses, and material items. Your wealth is about having the ability to say no to the things you don’t want to do.
The goal is Freedom not stuff.
Remember that CBB friends because the meaning is deep but very powerful.
Reduce Expenses And Spend Less Than You Earn
Make some phone calls and see if you can get interest rates or price reductions on services reduced.
Get rid of any subscriptions or extras that you signed up for with services that are not necessary.
You can even just get rid of service as we did with our home phone and cable the past few months.
Let’s review only a few of many simple solutions to reduce overspending problems.
- Stop Spending Money
- Motivate Yourself To Avoid Marketing and Product Reviews
- Use A Budget to track how your money moves in and out of your life
- Communicate before Spending with your partner/spouse or yourself
- Side-Hustle, Chop Expenses, Spend Less Than You Earn
Discussion: Comment below and tell me what simple solutions you have to reduce overspending problems? I’d love to read how you keep your net worth and budget in good shape.
Net Worth Losses and Gains
What happened to our money in March?
We had a pretty good March with a net worth increase of 2.16% or $33,725.72.
Our March budget wasn’t too bad but we could have saved more money.
We find that we are online shopping for items that we typically could find cheaper.
With the lockdown and wanting to avoid stores we take the punch and spend a few dollars more.
Our savings difference of $2555.16 is nothing compared to our investment increase.
It would be nice to see it continue to climb however we are young and take some high risks with our money so we expect ups and downs.
Other than that, the numbers don’t lie.
See you next month.
Calculating Net Worth 101
Do you know how to calculate your own Net Worth?
We like to calculate our net worth every month so we know if we are still on track.
Some people calculate it yearly or quarterly but it’s up to you and how informed you want to stay.
Net Worth is only an estimate and not everyone uses the same type of figures to tally it up.
Some of you may not include vehicles like we do or leave out assets inside the home as we have.
You might be that person that believes that your house should be excluded.
It depends on what you want to calculate or what you can sell today and make money for tomorrow.
Figuring out net worth is fairly easy as long as you know your monthly financial numbers.
Net Worth is adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.
Understanding your net worth will help you determine if you are on track meeting or beating your personal financial goals.
It doesn’t get any easier than that.
Determining Your Net Worth
Net Worth = Assets – Liabilities
Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey.
These are our numbers and our goals, not a means of comparison towards your own goals to others’ target goals.
We don’t care how much money others earn or if they have a high net worth or if it is lower than ours as it’s not a competition.
I hope our experiences will help guide you along your financial path working towards debt freedom.
Not Everyone Follows The Same Path
Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.
Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or injured on the job and so on but you can’t let that stop you from achieving your financial goals.
You may have been given trust funds, paid-for homes, educations, or other perks that give you a financial kick-start and that’s OK too.
Earn It, Save It, Invest It, Build It
Remember what I said, “It’s not about how much money you make, it’s how you save it”.
The reason people accumulate wealth is that they know how to save or invest even if inherited or a lottery win.
The smallest improvements should mean big strides in working towards reaching your goals.
Sometimes we have to fail to learn and we’ve all been there.
Money can be evil for some people especially those who have a negative attitude towards their financial situation.
Be optimistic and little by little with determination you too should see improvements if you want that to happen.
Canadian Budget Binder Net Worth Updates 2021
Click the links below to read our net worth updates for the year 2021.
That’s all for this month’s net worth update but please check in the middle of May to see how we made out in April 2021 with our financial portfolio.
Note: This page may contain affiliate links where this blog earns a little income if you choose to use a product or service.