At the end of the day, the best way to be healthy is to follow the Canada Food Guide and to exercise regularly. But what does the Canada Food Guide have to do you with your finances? By following a financial food guide, you can make the most of your money and save without breaking the bank or your budget. Here's how:
1. Learn the ingredients of a healthy financial food guide
The best way to make money, is to understand how it works. Our wealth consultants can sit down with you to help identify your financial needs and goals. They can provide advice and help you develop a financial plan that is unique to your personal financial situation.
2. Set a goal
Whether it's paying off your student loan, buying a home, or saving up $5,000 within the next two years, the actual goal isn't as important as having one. Why? Because developing a road map to financial freedom is easier when there is a destination.
3. Invest in your future wealth health
Investing small amounts of money over a long period of time is often better than investing a lot of money for a short time due to the power of compound interest. This is especially true for RRSPs (Registered Retirement Savings Plans). What is compound interest? It is the interest earned on interest. Plus, your RRSP will tax-shelter the original amount invested plus your compound interest. Now, that's something you don't mind increasing (rather than the number on your bathroom scale).
4. Control your debt
If you owe money, make sure it's not credit card debt. Those companies charge at least twice as much interest as a line of credit from your financial institution. To reduce your debt, try to pay your entire credit card balance every month. If you can't do that, pay as much as you can - never just pay the minimum monthly balance. Compound interest is your worst enemy when it comes to debt. Think about insurance to keep you and your family protected (think of it as food safety)You need insurance for your belongings, for your life, for your family (unless you fly solo), and for your limbs. Nothing wipes out goals, plans, and good ideas faster than something bad happening. You just never know. Insurance can help safeguard you and your loved ones against different scenarios.
5. Make a meal plan for your budget
Make a list of your monthly expenses and categorize them into fixed (e.g. mortgage payment, auto insurance) and variable (e.g. groceries, entertainment). Now subtract that from your income. If you end up with a negative number, you need to pare down your variable expenses. If there is leftover, you need to determine how to spend that money wisely: pay off excess credit card debt, invest in a Tax-Free Savings Account (TFSA) to save tax-free, contribute to your RRSP - the possibilities are endless. Make your decision based on what option will best help you achieve your financial goals.
6. Share your retirement plans with your significant other and make sure you are both saving for retirement
A recent poll in the National Post reports 68% of not-yet-retired Canadians have not shared their retirement plans with their significant other. It's essential to share your plans with each other so you can plan for each stage of your retirement and make sure neither of you outlive your savings.
7. Fill out beneficiary forms and keep them current (it’s kind of like ensuring you have everything on your grocery list)
It's important to make sure your beneficiary forms are filled out and current. If something should happen to you, your loved ones won't be left in the dark and you won't be sharing your estate with the government.
8. Review your employer’s benefits and know what you are entitled to
Make sure to review your employer's benefits. It's important to know your dental, health and wellness benefits, and what types of insurance you pay into each month. It's important to review this on a regular basis (like you do with yearly doctor checkups). You may recognize areas you do not have enough coverage or where you are not taking full advantage. The right mixture of these healthy ingredients can help create the right financial recipe for you and your family. Expert advice can help you determine the right combination of ingredients to have sweet future successes (and no sour surprises). Whether it comes to estate planning or financial planning, we have a team of experts to help.
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