New Year’s Resolutions are always rather shitty. See. I’ve already broken one: swear less in published articles. I even wrote a subheading to this resolution that reads, as Marilyn vos Savant says, I’ve never found an interesting person with a foul mouth – although, I’ve never claimed to be interesting.
I think all these years I’ve had it wrong. As another arbitrary ending approaches, I realize my past lists are more a tally of failures than accomplishments. Does anyone actually drink ‘11.5 cups of water daily’? Or just ‘eat healthier’ (whatever vague threshold that refers to). Nevertheless, there is something sort of beautiful about the idea of a fresh start, even if there is never truly such a thing. So, for 2021, and this is in print so I must be held to it, I am keeping the bar remarkably low. 1-cup-of-water-daily kind of low. And in the vein of feasible things, I am here to talk about what may be the most practical way to start your new year: budgeting. (I never promised excitement). Rather, a painfully manageable list of financial resolutions that you can or cannot choose to adopt. I will call it,
Gumption for the Mundane:
Resolution 1: Pay yourself first
You’ve just gotten paid (yay), what do you do with that money? (No judgement because I too am well-versed in the disappearing paycheck act). Does it go directly to your landlord? $24 almond butter at Whole Foods? A $200 white tee from Aritzia, justified because it’s so soft? The real-life Voldemort that are student loan servicers?
Same. But lately I’ve got to thinking, what the fuck? (strike two).
Why should everyone else get my money before I do? The most important tidbit on budgeting I stole from a source far more qualified than me, is that it does not start with bills, but rather, yourself. I will get to this.
I recently learned of Parkinson’s Law. It is the principle that demands will always expand to consume all available resources. Just as work expands to consume all available time, spending will expand to consume all available unallocated money. This is why this article has taken me a full week instead of a narrow two days: because I had the full week. (editor’s note: we will be shortening her deadlines posthaste.)
Meaning, we spend what we have available.
And why not divvy a portion of what we have to ourselves and to our future.
Resolution 2: Build an emergency fund
You drive your late Papas 2007 Prius and it malfunctions? Likely.
This is where your emergency fund comes in, which is my distressed term for your run of the mill savings account. Life will inevitably happen and it is the “adult” thing to do to have 3-6 months of expenses saved up.
Liquidity, which is a finance term I’ve grown to hate, refers to “the ease with which an asset can be converted into steady cash without affecting its market price” – Investopedia. Cash (like that in your savings account) is the most liquid of assets. And as such, accessible for emergencies.
This fund can be started with depositing as little as $20 of your paycheck each month to your savings account, if you can. A little financial exhale to know you have yourself covered.
Resolution 3: Contribute to your RRSP and TFSA
I honestly cannot fuss about this enough. I spent an unreasonable amount of time trying to calculate how much the average Canadian pays in tax throughout their lifetime and the inflation multiplication that was required ruined me. Just take my word for it: the number is very large. So, to not alleviate that amount and use the government accounts available to you is, to put it kindly, really fucking dumb (there it is again).
If you’re employed at the kind of charming institution that matches your RRSP contributions, you should really be contributing to your RRSP. It is free money.
If you are a freelancer who is religiously bludgeoned by tax season come April, you should contribute to your RRSP. You will pay less tax.
If you are a Canadian citizen, contribute to your TFSA (Americans, it’s the Roth IRA for you). This is tax-free investing. The iPhone 12 Pro Max of savings accounts.
Choose a monthly contribution amount that doesn’t make you feel suffocated, but also is significant enough that it may demote your americano misto to a dark roast with milk a few times a week. Just a suggestion.
Resolution 4: Automated Payments
The aforementioned all seem like cute little ideas, except, if you’re anything like me, you will never follow through. In what is potentially the most productive budgeting tip for a financially stable 2021: automate your payments. All of them. No matter how chaotic you are with your spending, this will force you into budgeting. Automate your monthly credit card payment, emergency fund deposit, TFSA/RRSP contribution and then, after you’ve paid yourself what you can, your monthly bills. This, (remember Parkinson’s Law), makes it so the inevitable consumption of money is allocated responsibly.
Now, I would never suggest nullifying the splurge, because, well, pot, kettle…But rather to splurge with the remainder of your money once you have paid the preceding list.
Splurge with what’s left. Or invest in sustainable companies you believe in (more on this for 2021)!
Resolution 5: Ramble less (this one’s personal):
A flow chart of what I just tried to say for those who can’t be bothered with my shit (last one for good measure):
Your paycheck –> Basic needs –> RRSP (especially if your ‘employer matches’) –> Checking account –> Emergency Fund & TFSA –> Guilt-free spending or more investing!
(It can’t speak to any sort of proficient writing that my last 870 words can be distilled to a 25-word flow chart.)
In any case, here’s to 1 cup of water daily and keeping the bar remarkably low.