Plan for the future including retirement and children’s education and for major purchases such as a house, cars, vacations, etc.
- Set Financial Goals
– Set short, mid and long-term financial goals and determine how to achieve them. The “how” is the most important part of the goal planning.
- Know Your Financial Situation
– Determine your monthly living expenses, irregular expenses and monthly debt service payments and make a budget.
- Keep a Record of Daily Expenses
– Be aware of where your money is going and identify areas where spending adjustments need to be made.
- Develop a Realistic Budget
– Follow your budget as closely as possible.
– Evaluate your spending month to month.
– Compare actual expenses with planned expenses.
– Adjust budgets as required.
- Don’t Allow Expenses to Exceed Income
– Avoid paying only the minimum on your credit cards.
– Don’t charge more every month than you are able to repay to your creditors.
– Try to keep a zero balance in your credit cards
– Save at least 10% of your net income for yourself.
– Accumulate a minimum 3 months net salary for an emergency fund.
– Save for irregular expenses such as car and home maintenance, gifts, vacations, etc.
– Take advantage of current income tax rules which allow for tax-deductible savings for retirement plans (RRSP, TFSA).
- Pay Your Bills On Time
– Maintain a good credit rating.
– If you are unable to pay your bills as agreed, contact your creditors and explain your situation
- Understand the Difference between Your Needs and Your Wants
– Identify what your needs are.
– Money should be spent for wants only after your needs and savings goals have been met.
- Use Credit Wisely
– Use credit for safety, convenience and planned purchases.
– Determine the total you can comfortably afford to purchase on credit before you buy.
– Don’t allow your credit payments to exceed 20% of your net income.
– Do not borrow from one creditor to pay another.
Get Financial Protection
Make sure you have enough insurance protection for potential financial losses. You don’t want to find yourself in a financial crisis.