Joan Burdeniuk
Contributor
Well the new year is upon us, and many of us will start the year with great intentions of improving our health.
If you are considering your financial health this year consider these three steps to improve your financial fitness.
Step one:
Make a budget – yes the ‘b’ word.
It’s the financial equivalent to a diet and is just as important to your financial health as eating right is to your physical health.
Start by looking at your bank and credit card statements for at least three months. You might be surprised at how much you are spending.
Knowing where your moola is going allows you to make informed choices. Your budget doesn’t have to be fancy; there are numerous tools available to help you.
Most financial institutions will have calculators and tools available on their banking sites that you can use, or stop in and talk to your financial planner, they love budgets.
If you prefer to go it alone google budgets and find something that works for you.
Ultimately the goal of a good budget is to help you live beneath your means so that you can enjoy today and achieve your long term goals.
Step two:
Put savings on auto pilot. One trick to help stay on budget is to set up automatic transfers on paydays into separate savings accounts. Ideally you will want enough cash reserves to cover necessary living expenses for 3 to 6 months.
Unfortunately mills burn down, mines downsize, and break-ups happen.
Emergency savings allow you survive unexpected situations without having to resort to drastic measures.
There are various investment options that you can consider to help your savings work for you like registered retirement savings plans (RRSP) and tax free savings account (TFSA).
No matter how you choose to invest your savings the first step is to get it out of your day to day cash flow.
Have some fun with this, there are going to be items in your budget that are important to you and you are willing to spend money on, so plan for them.
Want to go to Mexico in March- start a “holiday savings” account. Hunting in September- start a “high maintenance husband savings.” With a little planning it is possible.
Step three:
Review your credit report.
In today’s financial world this is the equivalent of your financial handshake.
Credit Bureaus keep monthly records of your current and past payments, credit limits, and debt level.
This information is obtained from companies that have granted you credit and from public records like courthouses.
This is then used by lenders, insurers, landlords, employers, utility companies and others to evaluate the risk that you present.
You have the right to obtain a copy of your consumer disclosure free of charge without impacting your credit rating, by mail or in person, but expect to jump through some hoops to get it.
The two largest credit bureaus in Canada are Equifax and TransUnion.
It is not uncommon for there to be errors or omissions on these reports.
Inaccurate reporting may result in you having to pay higher interest costs or being declined for credit.
In subsequent issues of this column we will go over how to read a credit report, and ways that you can improve your credit rating.
