Bad credit is preventable. Bad credit in Calgary is a scary reality, but very easily preventable. Spending your money wisely takes some time, practice, and one easy tip: creating a budget. When you create a budget for yourself, it is near impossible to lose track of how much money you spend per month and where it all goes.
- Determine exactly how much you have to spend on everything per month. After taxes, you should have enough spending money for rent, groceries, utilities, insurance, cell phone bills, an emergency fund, and extra spending money. First, it would be wise to subtract your rent, groceries, utilities, insurance and cell phone bill from this monthly amount. That way, you have a better idea of how much money you can spend frivolously.
- An emergency fund is always a good idea. What would happen if you had spent all the extra money that you had for the month, but then realized that you needed to buy a new windshield or pay for new glasses? You can’t do either one of those needs without an emergency fund.
- Cut down on your spending. When you make a big financial change, like buy a house for the first time, you will need to hold onto your wallet a little tighter. Buying a new outfit every week is not a need and this is how bad credit starts. If you continue to blow whatever extra spending money you had on shoes and a new outfit, you may realize that you cannot afford to pay off the credit card bill, and that’s when the problem begins.
- Keep track of where you spend your money by keeping your receipts. It’s best to keep your receipts from everything over the last 5 years. This way, you can have a clear, visual idea of how much of your money is going where.
- Most importantly, stay with your budget. It takes time and practice to follow your budget. Although difficult at first, in the end, you will be thankful that you don’t have bad credit.