2020 has made a lot of us anxious about our finances – and for good reason. The ongoing COVID-19 pandemic has resulted in a significant loss of income in many households across Canada. People could see their income change even more (for the bad) if the economy heads to a recession.
If there is one thing we know right now, it is that we cannot predict what is coming next, especially when financial planning is concerned. That does not mean we should stop making smart financial decisions.
We should get our guards up and start preparing for whatever 2021 throws at us, good or bad. Here is our list of five most important financial moves that should be on the top of your 2021 priority list.
1. Taking control of your finances – Know where your money is going
The most financial advice would be to know where exactly your money is going. This will give you an idea of what your finances truly look like. So you can analyze how to invest your money and which will be best for your future.
The math will them become very clear to you – how much you earn, how much you spend, and thus, how much you can save as well as invest. According to this you will calculate your household expenses after investment. Because if you make your investment once, you won’t turn back from it. So, consult your Life insurance agent before going ahead.
Once you have figured out how your expenses stack up against your earnings, you will be better prepared to create a smart financial plan. If you want to take control of your finances, that’s the first thing to do. From there, you can decide whether it is important to earn more, spend less, invest more, etc.
2. Do a budget reassessment
Now that you are aware where your money is going, the next step is to evaluate what you have learned.
Start by taking a closer look at your expenses: do you think you are buying a lot of stuff that does not really add any value to your life? Find them out. Here are a few budget-trimming tips:
- Save a lot of money on groceries by planning your meals before you shop. Most of us are buying some unnecessary things that wouldn’t be needed for everyday meal. So, if we buy according to our need, we can save more money and invest wisely.
- Get subscription to only one streaming service – no matter whether it is Amazon Prime, Netflix, Disney+, etc. More subscription means more expenses. Therefore, our saving will be less. Too tired of that channel? Pause the subscription and switch to a new one.
- Start borrowing movies, games, or books from your local library. If you buy any new one, the cost will be more than borrowing. And borrowing charge will be affected than buying a new book or games or movies. This will help you cut down further on your entertainment budget.
- Before making any large purchases, wait for 30 days. By reconsidering the purchase, you may find out you do not really want that item in question. Though it may tough for sometimes but large purchase means the expenses will be huge for anyone.
3. Create automatic transfer of savings – what you do not see, you cannot spend
Want to save more money? Then automate your savings. Most online banking services give you the option to easily automate your savings transfer. This means you can automatically stash a part of monthly paycheck directly into your savings account. Sometimes they provide you some discount or cashback for online transaction. Some online platforms also provide some reward points so you can use them for future as per your needs.
It is also advisable to try to save at least 20 percent of your income every month. You can put that money into a RRSP for tax benefits and long term growth.
4. Have a plan in place for unexpected expenses
Once you have sorted out your saving and spending habits, the next step to do is plan for the unexpected. If you can save 3 to 6 months; expenses in an emergency fund, you will be well-prepared for any surprises thrown at your way starting from unemployment to a car breakdown or anything else that you never expect.
A well-prepared emergency fund will also provide you with financial freedom while allowing you stay prepared. Such as medical emergency or any unhealthy activities at your workplace. This fund will save you for the time being and help you to manage sorting the unwanted bad condition.
It is also advisable to get yourself a term life insurance plan. A good term life insurance plan policy can help your loved ones in the worst possible times covering for funeral costs, debts, mortgage payments, and more. Remember, it’s an essential part of your family long-term financial security – take it seriously.
5. Invest for the future – build wealth
Once you have put your money in the market, through segregated funds, RRSPs, or independent brokerage account, your goal should be to keep the money there for as long as possible. You need to invest with a growth mindset, thus, giving your portfolio the chance to grow into a solid financial foundation.
Plus, the longer you leave your money in the market, the more it has the potential to grow considerably over time. Finally, we would suggest you to talk to a financial advisor about your investment goals. At Trust Life, term life insurance plan our advisors have over 30 years of experience in providing expert insurance and investment advice to businesses and individuals. Get in touch with us to know more about investment plans at no additional fees or obligations!