Financial Well-Being

As we head into the new year, it's a great time to take charge of your financial well-being and pave the way for a brighter future. Regardless of your age or where you stand, there's always an opportunity for enhancement. Whether you're aiming to kickstart your journey by creating a plan to eliminate debt or seeking guidance on budgeting and controlling your finances, here are seven financial resolutions for this year. These practical tips are designed to help you, regardless of your current financial stage.

Step 1: Take control of your cash flow

Financial freedom hinges on a simple principle: spend less than you earn. But what if you need to figure out where all your money is disappearing? Start by keeping tabs on your spending. It can be as easy as creating a basic spreadsheet – just hold onto your receipts and input the figures every day or two.

There's also a more modern approach: budgeting apps which effortlessly track your cash flow. Whether your goal is to break free from debt or simply monitor your spending, a budgeting app can be your reliable ally in getting organized.

Step 2: Craft your financial blueprint

Once you've got a handle on where your money flows, it's time to set your sights on the future with a solid financial plan. Why? Because tracking expenses is a bit like looking in the rearview mirror, knowing where your money went is beneficial. Still, it's about steering toward a proactive spending strategy to maximize every dollar.

Enter the financial plan: a written roadmap that lays out your economic aspirations and priorities while mapping the course to achieve them. This involves assessing your current financial standing, forecasting future needs, and planning steps to attain short and long-term goals.

Step 3: Say goodbye to pesky banking fees

Sometimes, we Canadians tend to stick with our banks out of loyalty, even when it's costing us a pretty penny. Those big banks love charging $15-$20 per month on average for a basic chequing account, which adds up to hundreds flying out of our pockets yearly to access our hard-earned cash. And let's not even get started on those savings accounts that barely offer any interest or the credit card options that don't quite hit the mark.

If you're feeling fed up with these fees, here's a game-changer: switch to an online bank that doesn't burden you with everyday banking fees and offers a decent interest rate.

Step 4: Boost your savings with smarter negotiations

Enhancing your savings requires breaking free from financial complacency, a tendency to remain passive while enduring recurrent bill increases – whether it's for your cable, internet, or insurance covering your vehicles and home. Here's an easy win: dedicate some time to give these regular bills a thorough once-over. I'm not suggesting you sacrifice your beloved Netflix nights, but consider giving your cell phone provider a call. A simple conversation about loyalty and what services you need and don’t need can unlock substantial savings. Remember to do this annually; it's surprising how much it can save you over time.

Step 5. Review your credit card features

How's your credit card treating you? Why not scan the latest credit card deals and promotions as the New Year begins? You might find a card that better suits your needs. Setting aside time once a year to review the cards in your wallet could lead to some pretty sweet rewards.

Step 6. Protect yourself financially

Now that you've mastered your cash flow, bid farewell to those pesky banking fees, and even managed to save on your recurring bills, it's time to tackle the less glamorous but crucial aspects: protecting yourself financially. Give your insurance coverage a thorough review and ensure your legal will is up-to-date and exists in the first place.

Part 1: Life Insurance

While many Canadian employees receive a basic life insurance benefit from work, often it's just 1 or 2 times their salary. For young families supporting dependents, this coverage might fall short. They may need as much as 10 or 15 times their salary to provide for their loved ones adequately.

Part 2: Will

Do you have a will in place? If not, it's time to make that a priority. A will is your voice after you're gone, directing how your estate should be distributed. It's one of the most critical legal documents you'll ever create. Without it, the government determines what happens to your assets and dependents – which might not align with your wishes.

Step 8. Work toward paying off debt

If credit card debt has you feeling weighed down, work on paying it down to 0 – that's your financial target; if you have credit card debt, look to swap it out for a low-interest credit card immediately. Why stick with a punishing 20% interest rate when you could opt for a more forgiving 8.99%, which could help you pay it off faster? Alternatively, consider an opportunity of balance transfer credit cards offering enticing 0% promotional interest rates. This will lower your interest charges and fast-track your journey by having those credit cards paid. You can also consider consolidating your debt.

Final thoughts: How do you set financial New Year resolutions and goals?

Setting financial resolutions for the New Year doesn’t have to be painful or restrictive. In no time, you can take control of your finances and build up your emergency fund or retirement. All it takes is a little planning. If you follow these seven steps, you’ll be well on your way to a healthy, happy financial future. Start with making a budget and a financial plan, then tackle other tasks, like setting up automated investments, getting insurance, and making a legal will. Finally, make debt repayment a top priority for the forthcoming year.