We're already a month and a half into 2021 and by now, many New Year's resolutions are distant memories. One of the resolutions I hear often, is "this is going to be the year I get my finances in order" and for a lot of people, that resolution ends up the same way as many others do.
In 2019 Manulife Bank completed a survey across a range of demographics and found that 25% Canadians admitted to making little to no progress on paying down debts, 19% couldn't break debt habits, 38% admitted to living beyond what their income could afford, and 9% had no clue of how much they spent on average every month. 1
The concept of financial health can often be daunting and overwhelming, but it doesn't have to be. In fact, there are a couple of very simple things you can do to get you on the right track.
Financial Health 101:
1. What are your spending habits?
I know it seems basic, but you can control your financial outlook by simply understanding where you spend you money. I like using excel, but even a piece of paper or a note in your phone is a really good way of noting money that you spend in a month. Compare that number to your bank statements and credit card statements to see what you actually spend and where any discrepancies may lie.
2. Budgeting doesn't have to be scary
It's never been easier to visualize your budget. Many banking apps show the inflow and outflow of money and some even categorize your purchases into major categories (Try MINT on the App Store - Its free!).
3. Make a debt repayment roadmap
Make a physical document where you write down all of your outstanding debts, whether that be loans, credit card debt, etc. and pay down the most expensive debt with the highest interest rate first.
Also, consider consolidating all of your debt into one loan. This can sometimes make it easier to manage as well in certain situations.
4. Let your money work for you
Saving doesn't have to be daunting either? One of the number one things I recommend to people is automatic deposits from their bank accounts to a TFSA, an RRSP, or even a non-registered investment account. You will surprised what even 50$/month will do for you. Inflation is ~2% so if you're not keeping up with that, your money is being devalued.
5. Speak to a professional
We are here to help! Managing debt and practicing good saving habits are far more likely to happen when you are accountable to someone. A professional advisor will help you set realistic goals and provide sound advice.
Want to know a little more about your financial health? Contact us today for a free financial review.
Sources:
https://www.manulifebank.ca/personal-banking/plan-and-learn/personal-finance/2019-canadian-debt-survey.html