Create a budget.
Whether your financial goal is to buy a first home or retire at 50, a budget is the key to getting you there. It helps balance your income with your expenses, guide your spending, and gain control of your money. Seeing all the numbers in black and white can offer significant insight on where your money is going, and where it could be put to better use.
Start with a monthly budget. Record all your monthly income and expenses. Use past bank and credit card statements as your starting point to document current spending habits – everything from utilities to food, entertainment, clothing, and loan payments. Don’t forget to factor in irregular expenses such as birthdays, Christmas, professional dues, etc. Allocate amounts for savings to assist in getting you to your target. Be realistic with your numbers and goals and keep adjusting until they work.
Track and adjust your budget.
Whether it’s a spreadsheet or a budgeting app, put a plan into place to maintain your budget throughout the year. Figure out how to live by your budget and hold yourself accountable. Budgets are fluid documents. Be sure to review regularly and make adjustments as needed. Once you have a good baseline, making tweaks is easy.
Pay off high interest debts.
Prioritize high-interest debt. Credit cards typically carry a high interest rate, making interest charges a big part of what you’re paying each month. Try to pay more than the minimum requirement to reduce your debt faster or transfer your balance to a lower interest card. Another option is to consolidate your debt with loans or lines of credit. Bundling your debt can help you better organize your monthly payments and pay less in interest.
Switch to a credit card with better rewards.
Rewards and cash back might sometimes be worth it depending on your spending but be sure to research the interest rates and read the fine print for fees.
Automate bill payments.
Set up pre-authorized payment on recurring expenses to prevent late fees, penalties or missing payments. The process works best with bills that are the same amount every month like insurance or lease payments. Not only does this save you time, but it also reduces stress and simplifies your life. Bonus – a history of on-time bill payments looks good on your credit report. While the process is largely hands-off, it's still important to monitor these accounts regularly for potential fraud or errors on statements, but automatic bill pay can help you avoid and pay down debt.
Automate your savings.
Just like automatic payments, setting up recurring contributions into a savings or investment account can help you meet your savings goals. You set it up once and let your portfolio grow from there. With the money “out of sight, out of mind”, it is easier to resist temptation and you could end up spending even less.
Invest your money.
Whether you’re investing for retirement, paying off your mortgage, or just looking to grow your savings, know how much money you have to invest and understand your time horizon. Knowing when you’ll need the money will give you a better sense of appropriate investments to choose and how much risk to take on. Choose a portfolio of assets you are comfortable with and ensure diversification for greater odds of positive long-term returns. Review your portfolio regularly to ensure your allocations are still on target and still work with your situation.
Create a will.
Regardless of your age or financial situation, creating a will is an important element of your estate plan. It is one of the best ways to protect your legacy and loved ones, putting you in direct control of the distribution of your assets. Through a will, dispersal of your wealth is decided by you, not left to the court system. In addition to protecting your assets, having a properly structured will can help minimize taxes upon your death, leaving more money to your beneficiaries. Don’t forget to review and update your will whenever you have a major life event, your children reach the age of majority, there is a change with your executor, or if your net worth grows considerably.
Review your insurance coverage.
Being prepared for the unexpected and having the right amount of insurance can protect you and your assets from loss that can send your finances spiralling. Common types of insurance include car insurance, renter’s or homeowner's insurance, life insurance, and health insurance. As your life changes, so too do your insurance needs. Factors like age, debt, family situation, financial goals, and savings all impact the amount of insurance sufficient for your circumstances. Whether needed as income replacement to guarantee comfort for your loved ones or to provide liquidity in paying for estate charges, choose carefully and re-evaluate regularly to ensure you’re adequately covered.
Take advantage of employer benefits.
Common benefits include pension, legislated and parental leave, and employment insurance but supplementary benefits can include dental coverage, prescriptions, life insurance, and pension contribution matching.
Sell your unused items.
Clean out your closets, basement and garage and sell the unworn clothing, toys and technology gathering dust. Apps and websites like eBay, Facebook Marketplace and Poshmark offer a platform to sell unwanted items that can make the process painless and profitable. These days there’s something for everyone available for resale. It can be a great fit for many different lifestyles and financial goals, even if you’re just looking to turn your old stuff into extra cash. Bonus – reselling is better for the environment and easier on the wallet.
Hire a financial advisor or tax pro.
If your financial situation is complex or overwhelming, it may be time to hire a professional like a financial planner, estate planning attorney or certified public accountant who can help you navigate your money management. They are specialists trained in money matters, so they can simplify the financial process for you and alleviate stress in making important decisions. They can take a deep dive into your statements and provide you with feedback and strategies to achieve your financial goals.