Generation Y may not be averse to saving, but tracking spending – even with the myriad of apps geared towards the tech-savvy generation – is like pulling teeth.
According to a study by TD Canada Trust, 55 per cent of Gen Y (babies born between the early 80s and 2000) are thrifty savers, putting away at least 10 per cent of their paycheque.
On the other hand, 66 per cent ignore their budget or neglect to create one in the first place. Entertainment is the biggest vice with 48 per cent admitting they’re most likely to overspend on it. A close second is snacks at 41 per cent, followed by fashion, which 38 per cent admit to overspending on. Another 29 per cent said they splurged on tech gadgets.
A Missing Generational Skill
The missing ingredient to the entertainment-geared generation’s financial frugality is clearly budgeting says Raymond Chun, senior vice president at TD Canada Trust.
“Budgeting is the key to battling the habit of overspending,” he says. “Cash flow clarity is essential to gaining control of where your money is going and ultimately reaching financial goals. Just like building an exercise routine, it’s tough to start, but eventually becomes easier and more automatic.”
How To Kick Start A Beginner Budget
There are plenty of apps to help you keep track of finances that help you monitor your spending and finances on a daily, monthly or yearly basis.
Of course, there’s always the old school spreadsheet trick – one of the simplest ways to tracking incoming and outgoing. Here are Chun’s top tips for putting together an effective budget tracker:
Step 1: Build a Template
“There’s a misconception that budgets mean complex spreadsheets – this doesn’t have to be the case with a personal monthly budget,” says Chun. “An effective budget can be as simple as a sheet of paper with two columns: one for money coming in and one for money going out.”
Obviously tracking your paycheques is key for your “money in” column, but don’t forget government rebates like HST cheques, birthday gift money from Aunt Tammy, and side money from selling your beanie baby collection or gigging on the flute in your buddy’s Jethro Tull cover band.
For the “money out”, be sure to include the big ones like rent or mortgage payments, phone bills and Internet but don’t forget those late night poutines or picking up Wu-Tang’s 36 Chambers LP (well, maybe not specifically Wu-Tang but you get the idea – miscellaneous expenses go here).
Step 2: Be Diligent In Your Tracking
Track your expenses like mantracker, that cowboy from T.V.
“A great starting point is to take advantage of virtual tools that are already tracking spending – like online debit or credit card statements – and then build on anything additional that’s not tracked online,” says Chun.
At the end of the month, separate you essential expenses from your non-essentials (sorry, poutine goes here).
“However you track your spending, the goal is to have a full picture of how and where money is being spent,” says Chun. “It can be surprising to some to see how non-essential spending can really add up, but the clarity helps in finding out where adjustments are needed.”
Step 3: Review and repeat
On a monthly basis, review the previous month’s expenses, and set goals for yourself to try to limit your discretionary spending over the month to come.
Once you’ve done this for a few months you’ll realize what’s essential and where you tend to cave into vices. Scientists peg it somewhere in the realm of 66 days to build or break a habit, so after a few months, tracking your spending and avoiding breaking your budget will become second nature.
“Always push yourself on whether it’s possible to put more money towards savings,” says Chun. “Life and circumstances are ever-changing, and a monthly budget will reflect this. The good news is, once a regular habit of budgeting has been adopted, making changes will be a piece of cake.”
What method do you use to track your budget?