We refer to plant-savvy gardeners as having a “green thumb” – but maybe the same can be said for budgeting savvy people who have a knack for managing personal finances. Canadian money comes in an array of colours but the colour green is typically associated with money.
In the garden we nurture our plants and flowers so that they will grow strong and healthy. So why don’t we apply the same perspective to money management? Here are 5 gardening tips that can be just as helpful for budgeting as they are for your backyard.
1. Annual and perennial budgeting
A gardener has to know the life cycle of the plants in his/her garden. Annual plants need to be replanted each year while perennials regrow every spring. A well-balanced budget will also take into account the different types of expenses we have. Some expenses are what we call “irregular”. Irregular expenses are costs you incur periodically, and not always at the same time of year. For example, vehicle maintenance costs or repairs can occur at any time of year. A strong budget will make room for savings that can be used for surprise expenses when they pop up. Regular expenses are the ongoing monthly bills we pay for things like housing, food and transportation.
A budget-conscious person may want to add up all of their irregular expenses from the previous year and create a plan. The easiest way to include these expenses in your budget is to divide the total by 12 months or the number of pay periods you have (26 if you are paid bi-weekly, 52 if weekly) and put that amount into savings every time you get paid.
2. The power of a good foundation
Gardeners know that plants need nutrient-rich soil, sunlight and water to grow. A strong budget is based on a solid foundation too. Too much debt can make it impossible to save money and paying too much interest will eat up any extra money you may have. If you don’t have a strong foundation for your budget you will find it harder to balance your income with your expenses. If debt is a problem for you, start with that – a bankruptcy or consumer proposal may be your first step towards prosperity.
3. Sunlight versus shade
Anyone who has ever tried to create a garden will know that some plants require a lot of sunlight while others need a little shade throughout the day. When it comes to budgeting the same theory applies. Some expenses need more light than others. For example, groceries require constant, ongoing attention. We shop regularly for food and should always be looking for the best deals and value. Car insurance can reside in the shade where we only review it if we make a change to where we live, what we drive or if it is the time of year to renew our policy. Knowing which expenses to focus on and when is as important as planning where to plant the sun-loving flowers in our garden.
4. Planting seeds
Garden centers offer seeds for planting as well as trays of annual and perennial flowers already in bloom. A great budget will incorporate short-term financial goals and long-term goals that need time to grow. Planting financial seeds for the future is also an important part of a healthy budget. Some expenses should be for now and others for later. Retirement savings is a perfect example. Planting seeds now is the way to grow savings for your golden years.
5 Pulling weeds
Pulling weeds is an ongoing chore that will keep your garden healthy. A healthy budget requires a little pruning from time to time as well. Consider the warning signs of financial difficulty as financial weeds in your budget. At the first sign of financial trouble, (“living in overdraft” or over-using credit cards) pull the weeds and get back on track. When debt begins to take over your finances just like weeds overrunning a garden – get help and explore your options as soon as possible.
If you have debt or are finding it difficult to manage your day-to-day finances – get some advice. Spergel’s Licensed Insolvency Trustees have a “green thumb” when it comes to budgeting and dealing with debt. We can help you cultivate and nurture your best financial future. Please call 310-4321 today for your free consultation.