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Making Financial Fitness your New Year’s Resolution

December 29, 2017

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The Holiday season is drawing to a close and as we approach the New Year, many people find themselves thinking about their New Year’s resolutions. In 2018 you might be striving for a promotion, diving into the real estate market or even attempting to drop those stubborn extra pounds you accumulated in 2017. Although we wholeheartedly agree that personal and professional fitness is important, it’s time to start thinking about your financial fitness.

Financial fitness means having the money you need, when you need it. Whether it be a family emergency or the arrival of a higher-than-usual bill, being financially fit will have you covered for anything that life throws your way. To get back on track with your financial fitness goals, we’ve come up with a few basic tips to help get you there:

Pay bills in full and on-time

According to a survey done by Ipsos, a global market researching and consulting firm, a whopping 26% of Canadians said they are not able to meet all of their financial obligations on a month-to-month basis. With the cost of living skyrocketing in some areas of Canada, these numbers are not alarming, however it is important to create a budget and stick to it to ensure that your household expenses are being met before considering any “extras”. If you’re finding that your income is insufficient to support even your most basic household needs, it may be time to consider getting a new job or even a second job to help support the increased cost of living.

Emergency Savings

Most financial advisors suggest establishing a savings account that holds the equivalent of three months of living expenses in case of an emergency. Whether it be a sudden illness, a family emergency or loss of job, having money in your savings account can help relieve some of the pressure that these emergencies bring along with them. This number may seem overwhelming at first, but by contributing just a little bit each month to your emergency savings, soon enough you’ll rest easy knowing that if something unexpected were to come up, you won’t have to go into debt to keep yourself afloat. One way to ensure your success is to set up a pre-authorized withdrawal from your chequing account to your savings account that corresponds with each of your paycheques.

Save for Retirement

Statistics Canada reported that 65.2% of Canadians were contributing to either an RRSP (Registered Retirement Savings Plan) or a TFSA (Tax-Free Savings Account) in 2015. Saving now for retirement ensures that you will have the financial resources to live independently throughout your golden years. Check out this retirement savings calculator to see how much you will need to contribute in order to make life easier once you’re no longer working: https://www.getsmarteraboutmoney.ca/calculators/rrsp-savings-calculator/

*Remember, this does NOT include any CPP (Canada Pension Plan) or OAS (Old Age Security) that you may receive.

Become Debt Free

In September 2017, Statistics Canada reported that household debt as a proportion of household disposable income increased to 167.8%, up from 166.6% in the first quarter of 2017. This means that for every dollar of household income, Canadians owe $1.68 in credit market debt.

Rising interest rates, housing markets and the inflation of household necessities are making it more and more difficult for consumers to keep up with their basic needs, which is why there’s no time like the present to create a plan to become debt free. Our debt calculator will give you a general idea of how much each debt repayment option may cost you and how long it would take you to become debt free.

Alternatively, if you would like a professional opinion, don’t hesitate to reach out to one of our ten offices located throughout the Lower Mainland, Fraser Valley, Vancouver Island and Sea-to-Sky corridor.

We provide a free, no-obligation consultation where we will review your unique situation and supply you with all the information you need to make an informed financial decisions. Remember, it’s imperative that you get financial advice and services from a qualified professional; there are many debt consultants out there that claim they can help you become debt free but only a Licensed Insolvency Trustee is federally regulated and licensed to provide these services.

Create a Budget and Stick to it

We would argue that the most important part of being financially fit is creating and sticking to a budget. Without doing this, you may not have the ability to pay your bills, save for emergencies and retirement or become debt free! Download our budget sheet here where you can track your income and expenses on a monthly basis. This will help you figure out where you’ve overspent and assist you in creating a plan of action to prevent that from happening in the future.

Visit our website to read our many blogs that give you tips, tricks and resources for being budget savvy.

Don’t forget to follow us on Facebook to stay up-to-date on all of our most current personal finance news and blogs.

Here’s to becoming financially fit in 2018 – Happy New Year from your friends at Smythe Insolvency.

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