Financial Fitness in 2021
December 24, 2020Financial Fitness
The start of a new year is the perfect time to take stock of the choices made the previous year and to consider ways to improve your financial health. In July 2019, Manulife Bank of Canada surveyed thousands of Canadians to see how Millennials, Gen Xers, and Boomers manage their money and debt. The survey1 found that 1 in 4 indebted Canadians admit to making poor progress on paying down their debt — 19% are not able to break the debt habit and 38% of Canadians living with debt admit it was because they lived beyond their means. 9% of Canadians have no clue how much they spend, on average, every month.
There are some ways to measure and improve your financial fitness in 2021. If financial health is one of your goals, it will probably mean spending less and saving more — which will be good for YOU.
Financial fitness tips:
1. Know where your money is going.
It seems simple but you can gain control of your financial situation by recognizing where your money goes. Start by writing down everything you think you spent money on last month. Next, locate your most recent bank and credit card statements to see what you actually spent. Knowing where your money is going is the first wise thing you can do to make positive changes in 2021.
2. Understand your spending habits.
Take a moment to think about when and why you buy. There may be a pattern that leads you to unnecessary spending. Always ask yourself if you need the item right NOW and be sure to check your budget BEFORE spending.
3. Take inventory of your debt and create a plan to eliminate debt.
Put all outstanding balances together and make note of when your payments are due. Be sure to pay bills on time to keep your credit score in good standing. It’s all about taking small consistent steps to get there.
- Write it down — map out a realistic repayment schedule.
- Pay down the debt with the highest interest rate first — continue making the minimum payments on all of your debts, but put the largest amount of available cash on your most expensive debt.
- Make more than the minimum payment each month — this will help you pay the debt down faster.
- Consider consolidating all of your debt into one loan — this will make it easier to manage and then you can concentrate on paying the loan down as quickly as possible.
- Make wise decisions — avoid buying big ticket items or taking on any additional debt in order to make these kinds of purchases.
Paul Lorentz, Executive Vice President, Retail Markets says, “We’re seeing that debt management, reducing spending and saving are, more than ever, top of mind for Canadians. Just as importantly, Canadians are also more aware of the financial choices they’re making. They are making good financial decisions to put their finances in order for the future even knowing that they may not be able to maintain their current lifestyle because of them.”2
4. Start saving.
Saving doesn’t have to be difficult or time consuming. Set up automatic fund transfers from your chequing to your savings account — ANY amount is better than nothing. You can also set up pre-authorized transfers directly to a TFSA or RRSP.
5. Speak to a professional.
People who work with an advisor to create a plan for being wise with money are more likely to reach their goals. Managing debt is easier with the help of a qualified professional who will help you set realistic plans in place to reduce and eliminate your debts as efficiently as possible. If you are looking for a trustworthy Financial Representative, one of our representatives will be happy to meet with you for a FREE financial review. To sign up now or to learn more, go here.
6. Set realistic goals for 2021.
Realistic goals help you determine what’s doable and what may have to wait. Your goals this year might include a home purchase, a vacation, or a career change. Write them down. Then, create a budget and a strategy for saving to reach them. Prioritize and plan to reach your goals!
You can get financially fit in 2021. Just like a new exercise program, diet or lifestyle change, adopting long-term financial change will mean adjusting your attitude and commitment to making good and realistic habits that will serve you well in the new year and beyond.
Disclaimer: The information provided in this article is for information purposes only. It does not constitute professional advice to be relied upon. FaithLife Financial does not provide investment, tax or legal advice. Please consult with financial and legal advisors as appropriate.
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