Kickstarting Your Financial Wellness Journey

Whether you’re just starting or looking to refine your financial strategies, now is the perfect time to take steps toward enhancing your financial wellness

5 Tips to Guide You along the Path to Financial Well-Being

Set clear goals. Take some time to reflect on what you want to accomplish financially in the short and long term. Whether it’s building an emergency fund, paying off debt, saving for a down payment, preparing for a child’s education, or planning for retirement, having specific goals by including timelines and dollar amounts will give your financial journey direction and motivation.

Create a spending plan that works. A spending plan is perhaps your best tool to financial stability. Start by tracking your income and expenses to understand where your money is going each month. Identify areas where you can cut back. Allocate a portion of your income toward savings and investments. Consistently review and adjust your budget to stay on track. Don’t forget to average out irregular and variable expenses that change month to month. Also, remember to differentiate between discretionary and nondiscretionary spending. You should have more flexibility and control over the former. Changing the latter typically involves larger lifestyle changes like changing cars or where you live.

Educate yourself. Learn about basic financial concepts like registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), registered education savings plans (RESPs), compound returns, asset allocation, diversification, and risk management. Understanding these principles will empower you to make informed decisions about saving, investing, and managing your money effectively and efficiently.

Build an emergency fund. Having an emergency fund provides you with a financial safety net during unexpected circumstances, such as job loss or medical emergencies, or even happy times, such as maternity or parental leave. Aim to save three to six months’ worth of living expenses in a separate savings account. This fund will give you peace of mind and protect you from high-interest debt during challenging times.

Set up a will and powers of attorney for your health and property. Regardless of your age or health status, planning for life’s uncertainties is important. Having a will and powers of attorney for healthcare and property ensures that your wishes are respected, and you are protected in case of incapacity or death. Without these documents, decisions about your assets, finances, and healthcare may be left to others or determined by provincial laws. Consult with legal professionals to draft these documents, and review them periodically to ensure they reflect your current circumstances and wishes.