While it may take the patience and discipline, financial freedom is within your reach. Whether you’re trying to pay off large debts or boost your savings for a rainy day, large purchase or retirement – make 2019 the year you achieve financial freedom.


Save More of What You Earn

Only 31% of Canadians have a fixed savings plan, 32% have a rough plan and are dependent on cash flow, and another 32% simply save what they can.(1)  An unexpected bill, an emergency or a job loss could put many Canadians in a situation where they can’t make ends meet. It doesn’t have to be that way – even if money is tight, there are still ways to save more of what you earn.

  1. Know where your money is going. This will help you figure out where you can adjust your current spending
  2. List your fixed expenses, such as your utilities, groceries, and debt payments.
  3. List the expenses you have a few times a year, such as taxes, car maintenance, and vacations.
  4. List what you spent in the last month on “extras”, including shopping, going out to eat, morning coffee etc.
  5. Total your expenses and compare them to your net income. If you’re spending more than you earn, make cuts to your “extras” first and then look for ways to adjust spending on your fixed expenses.
  6. Set a Budget. More than 46% of Canadians have a budget, and 93% of them say they stick to it most of the time (2). A budget helps people plan for their finances and mitigate the impact of any surprise bills or expenses.
  7. Look for ways to save. Some bills, like your utilities, vary each month, which makes it easier to save money by being more efficient with your use. For bills with a more fixed cost, such as cell phone, cable or internet, shop around for reduced service rates to help you save more money each month Use your newfound savings to grow an emergency fund.
  8. Set up automatic savings if you haven’t already done so. That way, you don’t have to think about transferring money over each month.

 

Pay off Debt

Nearly half of Canadians carry credit card debt and one-third doesn’t pay off their credit card every month. (3) Furthermore, 52% rely on their credit card to make most of their purchases and only 26% pay their credit card balances each month, before beginning to accrue debt again. (3) Additionally, one-quarter of Canadians of all ages see their credit cards as another source of spending money, including 33% of millennials (3). While some debts, like mortgages or student loans, are considered “good” debts because they are investments, credit card debt is seen as a problem for many consumers. The high interest rates of credit cards may cause consumers to become buried in debt; however it is possible to pay down and eliminate credit card debt over time.

 

Eliminate Credit Card Debt

Credit card debt is easy to accumulate but often hard to pay off. If you carry outstanding balances on two or more credit cards, the rollover formula can help you take charge of your debt and pay it all off. Here’s how it works:

  • Make a larger payment on the card the highest interest rate and pay the minimum on the rest.
  • Once this card is paid off, apply the amount of its payment to the minimum amount you were paying on the card with the second highest interest rate.
  • When the second card is paid off, add that amount to the payment of the third card etc. until you have paid off all of your credit cards.

 

5 Smart Ways to Improve Your Credit

When you go to apply for your dream job, buy a house or car, it helps to have a great credit. Here are a few tips to keep your credit in good shape.

  1. Keep your balances low. If they’re high, pay them down.
  2. Pay off small card balances, and then use one or two cards for everything.
  3. Don’t get rid of old debt and good accounts. They help show a solid repayment history.
  4. Pay your bills on time. A large number of late bills can impact your credit score.
  5. Review your credit report, and communicate any problems you see to the two major credit bureaus, TransUnion Canada and Equifax Canada.

 


Sources:

  1. BMO.com (2019)
  2. Advisor.ca
  3. Global News, Feb 10th 2015

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