Posted on Friday 23 October 2015
With the 2008 recession in our memory and the current pandemic creating a lot of uncertainty, many Canadians are actively looking to create a more stable financial future. Money woes are a major source of stress, especially when caused by factors outside of our control.
The process of ensuring financial freedom and retirement savings for your future is not necessarily difficult but requires a lot of self-awareness and forward-thinking. The action you take now can be the foundation of a life of financial freedom if you want it. For instance, if you're looking to own a home without much stress, you might want to consider a 'tax-free' home savings account. Essentially, to make smart financial decisions, you must have a great understanding of the various things you can take advantage of. This will also go a long way in helping you avoid financial scams, as you'll be better positioned to identify what is real and what's too good to be true.
While not everything in life can be planned for, with a certain degree of foresight, you can be prepared for big life steps and surprises the same. Here are some tips that you can put into place now, to ease the worry of money down the road. These tips are worthy of consideration if you're ready to stop living paycheck to paycheck. Something you can pass on to your teen as well.
You should be earning more than you spend
This one seems obvious, but to really plan for the future, it is important to live within your means now. This may mean cutting down on dining out, opting for a slightly smaller apartment, or avoiding reliance on credit cards. Getting express loans isn't considered an income.
Conservative spending doesn’t have to be boring, but it does require planning. Try writing down all your monthly expenses to get an idea of the total amount you expend monthly. It may be higher than you realize. Also, consider different tax tips to ensure you know the accurate calculation of your income after tax deductions and to equally stay on the side of the law.
Start An Early Investment in Participating Life Insurance :
You should be considering life insurance in some form, and choosing a participating policy sets you up to make some money back over time. This type of policy offers you dividends based on the performance of the company. The dividend can then be re-invested, left to accrue interest, or withdrawn as cash. If you’re going to be spending monthly anyway, you may as well get the advantage of potential returns!
Consider future expenses:
We know that spending habits can vary greatly over our lives, so having an idea of your future financial commitments will help to plan now. Spendings such as mortgages, medical insurance, car insurance and family planning must all be considered. Having an emergency savings account is a great way to relieve any unexpected expenses, too.
You should also constantly assess your credit score. You might need to get a loan at any time and your credit score will become relevant to the process. You'll want to ensure you have a great rating to make the loan process convenient. Although My Canada Pay offers bad credit loans, there are still ways for you to improve that low credit score. For this purpose, you'll need some amount of good debt to get things in shape.
Reevaluate your expenses regularly:
Different times of the year and life changes probably see you spending your money differently. You may have an injury that comes with more medical bills one year, you may just decide to take a more expensive vacation, or you may just develop a habit for artisanal coffee. In fact, people don't often realize they are overspending on food until they write down their food expenses.
These should all be taken into account and tallied. Seeing the numbers written down clearly is a great way to truly grasp your financial habits.
Shift to long-term investments:
While it often pays to take bigger risks with investments, these should not come before safer, long-term investments. This could be a long-term savings account, real-estate investments, or other guaranteed services or products. Over a lifetime, the returns can really add up. Plus once you have real money, you won't have to get too many cash loans.
Real financial freedom comes to those who plan for it and make thoughtful financial decisions early in life. It's never too late to achieve financial security, but the earlier you start planning the better!