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With 2019 coming to a close, I would like to go over some basic financial life hacks to start 2020 in a positive motion. Let’s start with the importance of making a Budget. Keep it simple. Use categories of “Fixed Expenses" for payment’s known. Example: Car Payment. “Variable Expenses” for payment’s unknown or approximated.
Creating a budget gives a clear picture to where your money is being spent. In some cases, it can also point out how much you are over spending on items that are a Want and not a Need. Once you have your own personal budget it gives you the information to make adjustments or improvements. Tracking your Assets - Liabilities = Net Worth.
Examples of Assets: cash, investments, personal property and investment property. Examples of Liabilities: Any loans, mortgages, credit cards.
Let’s talk Debt, there is very bad debt and debt with added benefits. The very bad is usually spent on items that are more of an impulse purchase or emergency purchase you had not planned on. Those purchases usually hit the credit cards. Rule of thumb, if you can’t pay it off by month’s end, you can’t afford it. The other debt category is debt first, followed by financial benefits in the future. Examples of this would be student debt, mortgages in the form of personal residency, income property, recreational property and debt incurred by purchasing or starting up a business. The benefit of this category is it can be both income generating and equity building. Strive for paying yourself first. Incorporate “You” into the category under your fixed expenses. Also create an emergency fund. Start your focus on saving 1 months earnings, then 3 months, 6 months and build to a year of your earnings over time. If your employer has a stock plan, you should consider joining it. Pay into RRSP’s both personal and group if it is applicable. Give some thought to buying an income property to help off set the lack of a pension or an added value to a pension income stream.
Goal setting is a wonderful tool to keep you on track, wether it is for a purchase, savings, holiday or retirement. Set goals, big or small, keep track of your progress. Sometimes baby steps take you into a new direction you never thought possible.
True Story; When my husband and I first started out years ago we were broke, living pay check to pay check. After creating my first budget, the first baby steps were turning one chicken into several meals, chicken dinner, chicken pie, chicken soup. The next baby step was creating a little extra money to save. I encouraged my husband to have his friends over every other Friday. They would play cards, drink beer, laugh and leave their empties. I would take those empties back and it was money in the bank for us. Taking baby steps big or small is an action, making actions in a positive and forward motion makes goals obtainable.
All the best from my family to yours over the holiday season and the coming year 2020!
Anne Godin-Kewell, Mortgage Specialist & Certified Coach Practitioner ~ Mortgage Agent
Broker Lic# 10231 Disclaimer: The articles are owned and copy-write of the above. The information is not Investment Securities Advice. As always, before implementing anything financial, do your own due diligence. Read the latest press releases and regulatory filings.