The start of a new year is the perfect time to take stock of your financial situation and see how you can make changes to improve it. You need to make firm resolutions to help you get closer to your financial goals whether it be saving for retirement, a down payment for a house or starting a business. Here are some considerations that you might want to add to your resolutions list.
RESOLVE TO DO BETTER IN 2020 – Identify the financial mistakes that you made in 2019 and how you could have avoided them so that you are armed with that knowledge to help you avoid making the same mistakes in 2020.
Prioritize Your Debts – Make a list of all your debts and organize them according to the annual interest rate. Plan to pay off those with the highest interest rate first, these will probably be your credit cards. It makes no sense to save money in an account with a low interest rate when you are paying high rates of interest on your credit cards. You might want to also think about selling any assets that you might have such as matured savings bonds and using the money to pay off high interest debts.
Open a Registered Retirement Savings Plan – It’s never too late to start saving for retirement. Meet with a financial planner and let them advise you about the right plan for you. Even if you only contribute $50 a month it soon starts to add up and any contributions will help to lower to your income tax bill.
Rebalance Your Investment Portfolio - Meet with your financial advisor to ensure that your investments are still working for you, and that once attractive investments are still that way or no longer appropriate. If your financial goals have changed then you may need to rebalance your investment portfolio.
Set up an Automated Savings Plan – If your willpower to save money is not too great then consider setting up an automated savings plan with your bank. “Paying Yourself First” is one of the most effective ways to save money. With an ASP a specific amount of money will automatically be transferred to your savings account at regular intervals before you have the chance to get your hands on it. With regular deposits like this earning compound interest your savings will grow faster.
Collect Your Change – You may think that this is not a great way to save money, but you could be surprised! Whenever you pay with cash save the change or take the money that you get back from recycling bottles and cans at the store and put it into a jar. At the end of the year take the change you have accumulated and use it to pay down debt.
Commit to No Spend Days – Plan on taking regular no spend days or weekends, eat at home, find free entertainment and skip shopping. This is probably best done during cold and rainy weather that makes you want to stay indoors. Maintain the habit throughout the year to get the best financial benefit.
Get Healthy Without Joining a Gym – Save money on expensive gym memberships by doing free exercise videos on-line, working out at the park or taking winter hikes. There are a number of free apps such as Fitbit Coach and Nike Training Club that you can use to do workouts at home.
Cut Back on Your Bad Money Habits – these usually include eating out too much and buying too many clothes. Identify what makes you want to indulge in your bad habits and try a different activity to replace it. If you eat out too much try prepping your meals for the week on Sunday and ask friends and family to help you.
Start Using Personal Finance Software - This will enable you to keep track of where your money goes. If you don’t know how much you spend on coffee, haircuts, movie tickets or eating out how can you start to cut your spending?
Read a Financial Book Regularly - Some books recommended for Canadians are:
Personal Finance for Canadians for Dummies (2018) Eric Tyson
Millionaire Teacher (2nd ed 2017) by Andrew Hallam
Wealthing Like Rabbits by Robert R Brown
Worry Free Money (2017) by Shannon Lee Simmons
Happy Go Money (2019) by Melissa Leong
The Value of Simple (2018) – John A Robertson
The Latte Factor (2019) David Bach
Retirement Income for Life (2018) Frederick Vettes
Five to Ten a Day for Better Health (of Your Business)
Pros and Cons of Reverse Mortgages
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What to do When you Can’t Pay Your Bills
The Worst Financial Mistakes that you can Make
Do You Have a Spending Problem?
Not Good at Tracking Your Expenses? – Try the 80/20 Budget
How to Budget on a Variable Monthly Income