- Personal Finance Planning
Planning for your financial goals can be daunting. It is no surprise, to that effect, that nearly three-quarters of Canadians (73.2%) have some outstanding debt or have used a payday loan at some point over the past 12 months. Canadians who engage in financial planning report significantly higher levels of financial and emotional well-being than those who don’t. The COVID-19 pandemic not only taught us about the value of physical and emotional wellbeing but also highlighted the importance of financial planning and saving for a rainy day (or a rainy year)!
When it comes to financial new year’s planning, having an emergency fund is just the beginning. Simple changes can help you improve your financial situation and even pay off your debt. Are you wondering where to start? We’ve got you covered. Here are some new year financial tips to give you a head start to the new year.
Track Your Expenses
You don’t need a certified financial planner or advisor to track your expenses and hit financial goals. All you need to do is save all your receipts and note them down on a simple spreadsheet or even a notepad. This exercise will help you understand your monthly expenses and where you can begin to cut down your outgoings. Don’t forget to view your monthly bank statement to see the automated payments going out of your account. Who knows? You might even be tempted to cancel that monthly subscription you’ve never used or cut down on the number of times you order takeout in a week!
Introduce Healthy Financial Habits
Once you have tracked your expenses, it is a good starting point to have ‘no spend days’ a few times a month wherein you do not spend any money frivolously. On these ‘no-spend days,’ you could instead get your daily caffeine fix at home, for instance, rather than at your local café. Or, cook a meal yourself instead of ordering in – you might just find a new favourite hobby while also saving funds for a rainy day or emergency fund! These no-spend days will help you stay on track and even compensate for those indulgent days that you enjoy occasionally.
Build a Budget or Spending Plan
Once you understand where your monthly expenditures are highest, not to mention where you can easily cut down on your expenses, you must create a monthly budget that will help you get one step closer to your financial goals. Have you had trouble sticking to your budget in the past? Create a spending plan instead! A spending plan allows you more financial freedom since you can budget proactively and determine what expenses can be avoided. Jot down your necessary costs such as rent, utilities, and so on, and then create a spending plan for the remaining amount of your monthly available finances.
Improve Your Credit Score
20% of Canadians rarely or never pay off their credit card balance each month. While you may feel like there are bills like your credit card balance that can be ignored, don’t fall for it. All of these bills can creep up and bite you, as they do in fact affect your credit score along with your ability to seek financial services in the future.
How do you improve your credit score?
- Pay your bills on time
- Pay off debts and keep your credit card balances low
- Open new credit accounts only when necessary
- Keep an emergency fund handy so you don’t need to dip into your line of credit
Automate Your Savings
COVID-19 and its collective economic impact taught us all the importance of saving for an emergency. The easiest way to kick-start savings is by automating the process. Set up automatic transfers to your savings account with your bank so you never have to worry again about your emergency fund.
Find Ways to Boost Your Income
Not only will a passive income help you make more money, but it could also serve as a backup plan in the case of a job loss. Directly or indirectly, we all witnessed job losses in 2020. Now imagine if each one of us had an alternate source of income. Wouldn’t it have made the year slightly easier? Passive income could involve anything from freelance graphic designing to stock trading and everything in between. Sit down and analyze how you could boost your income and then work towards it. Never put all your eggs in one basket when it comes to financial goals for the new year and always try to maintain a steady income stream.
Financially Secure Your Loved Ones
Now more than ever, we understand the importance of financial security not only for ourselves but also for our loved ones. What is the simplest way to do that? Getting life insurance coverage so that, in case something happens to you, your family is financially secure.
While a majority of employees in Canada receive some life insurance benefits from their employer, it is rarely enough coverage to protect your family. There are several insurance companies in Canada including TD Canada Trust, BMO, Sun Life, Manulife, and many others with unique policies and features. What’s the easiest way to narrow down the list of candidates? Check out Life Simpli, a web portal that lets you assess your needs, compare quotes from companies offering the best life insurance in Canada, and apply for coverage right away! Financial planning is easier than you think. Get started today and pave the way for a healthy financial future, and don’t hesitate to contact us for assistance or advice.