Financial Resolutions for the New Year

New Year, new budget. Here are 10 financial resolutions that can help you put your financial cards in order this year.

o-NEW-YEARS-RESOLUTIONS-2014-CANADA-facebookRe-evaluate your finances

Create or update your net worth statement. To do this make a list of everything that you own – savings, investments, house, car etc. Then make a list of all your debts – loans, credit cards, mortgage etc. Subtracting your debts from your assets gives you your net worth. Use this as your baseline for monitoring your progress over the year.

Make a Budget

And be realistic about it. This is the best time to take a fresh look at how you are spending your money. Make a list of your expenses and subtract this from your income. Prioritizing your spending can help you to cut back this year and help you to make saving part of your budget.

Organization

Having a filing system or spreadsheet can help you keep your resolutions in check. Maintaining a comprehensive calendar of bill payments and deadlines will als help you to stay on task when it comes to paying your bills on time and within the limitations of your budget.

Set Goals

Make realistic goals. Make a list of what you would like to save for and put a price on each item. Prioritize these goals and create a time line of when you should achieve each one. When goals are specific and measurable they are easier to achieve.

Get in Control of your Debt

If you’ve calculated your net worth then you know exactly what you owe. Now is the time to stop shopping with your credit cards. In an ideal situation less than 28% of your pretax income should go towards your mortgage while no more than 36% should be allocated for all your debts combined. New years is also a good time to consider debt consolidation if you find yourself in an overwhelming financial situation. Take charge of your debt and resolve to get rid of your credit cards.

Create an Emergency Fund

As a goal you should start to save up enough money to cover 3-6 months of expenses in a savings account that can be accessed. Do not touch this money unless you absolutely HAVE to. (ie: lost your job, became ill, etc.)

Put Money Away for Retirement

Contribute to a retirement plan (401K, RRSP, employer plan) and keep adding until you reach the maximum. Progress towards your retirement goals by continuing to contribute each year.

Review your Investments

Check that your investment portfolio still reflects your financial situation. Buy and sell investments to refine your portfolio if necessary.

Take a Look at your Insurance Policies

A quick call to your insurance representative may reduce your premiums. Check to make sure that your health, auto, home, or tenants is still reflective of your life. Make adjustments where applicable.

Write an Estate Plan

Create an estate plan or modify your current plan. If you have had a new baby, married or divorced recently you will want to review your beneficiary designations.

New Years resolutions are easier to achieve when you have a well put together plan. Cheers to a happy, healthy and financially rewarding year!

 

 

 

How to Shop Smart This Holiday Season

The holidays bring about a lot of cheer, but also a lot of stress for many as the financial burden of giving that perfect gift may sometimes be overwhelming. Here are five tips that you can use to shop smart and save big this holiday season:

santa-online-shoppingAvoid the last minute shopping spree

One of the best ways to not get overwhelmed financially during the holiday season is to buy gifts in advance and to space out your purchases. A great way to do this effectively is to know exactly what you are looking for and to grab it when you see it on sale, or even when you have a few extra bucks to spare that week.

Make a list

Write a Christmas gift list that works with your budget, it’s how Santa does it! This will keep you in check when you do your shopping and prevent you from blowing your budget on impulse shopping.

Buy online

Avoid the crowds and skip the lines by doing your shopping on the internet. Shopping online can help you save a bundle and can prove to be very convenient at the same time. Many retailers offer online discounts that you cannot get in store, in addition shopping on special days like Cyber Monday can save you a bundle.

When shopping online it’s important to make sure that your information is safe and secure. Under the internet sales rules websites should include the retailer’s name, address and e-mail address and the website needs to be secure. In addition, using a credit card for payment is the best way to protect your purchase as it gives you statutory protection under Section 75.

Credit cards can be rewarding

If you are disciplined enough to do it, cash back credit cards can be very rewarding. This isn’t “free money” but by using a credit card that offers cash back rewards, and by being responsible enough to pay it off promptly, you can earn an extra $50 to $100 depending on your budget. This extra cash can be used toward a gift for a loved one or even yourself.

Keep all your receipts

No matter where you shop make sure that you keep ALL your receipts. The reason to do this is that there is always a chance that retailers will discount or mark down an item after you have already purchased it. If you find that a gift that you bought goes on sale you can bring in your receipt and ask for a price adjustment. Most retailers will honour the discount as long as it is within the window of their return policy, this can be for up to 30 days depending on the store.

Being a smart shopper this holiday season can save you a bundle as long as you put your mind to it. Also remember that it’s always the thought that counts. So, even if your budget is tiny, your heart is big and that’s what the holidays are really all about!

Should I Save or Should I Go?

When you’re young, it’s easy to look at what you hope to be decades worth of time and think, “I have plenty of time to invest, but my debt needs to be taken care of now. I’ll invest later.” Chances are, you’re thinking that way now, or even decades later—and that’s why you shouldn’t wait until you’re debt free to invest in your financial future.

There is always going to be debt, whether it’s your student loans, or a car payment or your mortgage or a credit card or two. There is not always going to be time to invest and see a real return on that investment. That’s right: the longer you wait to start investing, the lower your returns on those investments will be.

This doesn’t mean that you should ignore your debts. On the contrary! What we’re talking about is doing both. Here is how you do that.

1. Take Stock of Your Debt

If you’ve been trying to hide from your debt, now is the time to stop. Gather up all of your bills. Get a copy of your credit report. Verify all of your debts so that you know exactly how much you owe and to whom.

2. Fix Errors

Did you know that credit report errors have a huge impact on your credit score? And according to LexingtonLaw.com, millions of Americans have inaccurate credit reports. Go through your credit report with a fine toothed comb and make sure that any errors you find get fixed. Those debt verification letters you have can serve as proof if the credit reporting agency refuses to fix the mistake.

3. Pay on Time

Most personal finance articles will tell you that you have to pay considerably more than the minimum amount due on your credit statements if you ever want to pay off your debt. They’ll tell you to pay at least the minimum amount due, plus however much you are charged in interest each month. Most of the time they’re right.

If your financial situation is dire, you can get away with paying $5-$10 more than the minimum due each month for a few months while you work to get your finances straightened out and a budget set up. If your debt is freaking you out, you might want to consider something like debt consolidation to help you get your payments under control.

4. Pay Yourself

You’ve undoubtedly heard of the book Rich Dad Poor Dad. The central tenet of this book is the concept of “paying yourself first.” This means taking some money and setting it aside in a savings account every month and then paying your bills. This ensures that you’re saving for the future (and emergencies) while also paying your bills and paying down your debt.

And really—that’s where the heart of investing while paying off debt lies. As you build up money in your savings account and can afford to do so, roll your savings account balance over into small investments like CDs (making sure you leave a good amount in your savings account in case there are emergencies). Then, as these investments mature, you can roll your profits over into other investments.

So many people, when they think of investing, think of pouring thousands of dollars into the stock market or high yield bonds. It’s okay if this is your goal and if you work hard there’s no reason you can’t get there. For now, though, invest directly in yourself with your savings account, CDs and small investments. This way, you’ll have a good start for when you’re ready to retire later.

5 Low Cost Ways to Send Money

In the modern day of technology sending anything via snail mail seems to be going the way of the dodo. So it’s only natural that sending money using methods like cash, bank draft and cheque are following suite. This does not mean that these methods are not still viable options. If cost if your primary concern here are 5 ways that you can look into for sending your next money transfer.

wire-transferYour Bank

Banks are the safest and most reliable way to send money, if you are simply transferring money from one account to another within the same financial institution your bank will do this for you for free.

Wire transfer is another service that banks offer when sending money to other financial institutions, across provinces, states or countries. Wires are one of the best options if you are sending a global money transfer. Sending money overseas requires the following information: the name and address of the account holder, information about the financial institution, and the SWIFT or IBAN of the recipient bank. International wire transfer rates will vary depending on your bank, but generally cost in the $30-$50 range.

E-Transfer

Some financial institutions may also allow you to send money via an e-transfer. This is similar to the way that you would pay a bill online. You will still require a SWIFT or IABN for international transfers, in addition to the account holder’s name as it appears on their account. E-transfer is a great option when you are sending money to someone on a regular basis, you can even set up transfers to automatically send on a schedule. Rates for e-transfer will vary depending on your bank, but typically cost less than transfers done through a teller.

PayPal

PayPal allows users to send money from one PayPal account to another. PayPal accounts are typically attached to the bank account or credit card of the account holder.  It is free to send money via PayPal, but there is a charge to the recipient of 2.9% plus $0.30 per transaction. Fees decrease slightly for transfers over $3,000, while international transfer fees tend to be about 1% higher. If you are sending money in international funds be sure to keep an eye on the exchange rate as this may end up costing you some money in the end. If cost savings is important to you it’s essential to compare this potential loss with the cost of a wire transfer from your own bank, you would be surprised at times to find out that due to currency conversions, PayPal may be the more expensive option.

Personal Cheques

This may be seen as the old fashioned way, but if you are looking for the cheapest option possible (other than cash) cheques are your best option. Cheques can be handed to the recipient or mailed with little to no cost to either party.

Sending a cheque internationally or overseas that is not already in the country’s currency will often result in delayed processing so the bank can verify the cheque. The recipient may also have to pay a fee and cover the exchange of funds to their currency.

Bank Draft/Money Order

These are also excellent choices for sending money, especially internationally. Bank drafts can be written in the currency of the location that you are sending the money to. The cost of a bank draft or money order is typically between $3 and $10. Like cheques these forms of payment are safe to mail to your recipient and can be cancelled and returned to you if they are lost or stolen.

There are many different ways to send money both locally and globally, it’s important to know what your options are and what method works best for you and your situation. The cheapest option may not always be the best option.