Healthy Finance Habits for the New Year
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Ready to ring in the new year with better financial health? You’re not alone. Canadian debt levels have been on the rise for years, and to make matters worse, many Canadians are still feeling the effects from the financial fallout of COVID-19. With government benefits running out and credit card bills creeping up from holiday spending, it’s easy to look at the year ahead and want to start fresh. But without a plan to move forward, your debt can become overwhelming. While resolutions are great, they might not stick long-term, and it’s better to look at building healthy financial habits that will last well into the year. After all, while resolutions are broken almost as easily as they’re made, good habits can become a part of our routine and with practice and repetition. It takes 21 days to build a habit, so stick to this plan in January and before long, these habits will become second nature.
Here are some of the top healthy finance habits to cultivate in the new year:
1. Create a budget and use it. Budgeting is the most important thing you can do to be financially successful. Budgeting has two important parts - creating it and using it. Set up your personal budget with our simple budget tool, and track your income and expenses to get a better picture of your finances and help you plan out your financial future. Make it a habit: regularly review your budget and stick to it. Whether it’s Money Mondays or Finance Fridays, create time in your calendar to review your budget, and use an app or spreadsheet to update your budget regularly.
2. Set finance goals. Where do you want to be financially this year, next year, in five years and ten years? It’s important to work toward financial goals to help you learn to live comfortably and within your means, reduce your money troubles and save for retirement. Make sure you include short-term, midterm and long-term financial goals. It’s not enough to just say you want to retire at 65, or send your kids to post secondary school, or go on a trip next year. Write those goals down, and add in the small, actionable steps that will help you get there. Make it a habit: work with a finance coach to help lay the foundation for your financial goals and your roadmap to get there. Regular check ins with a professional will ensure you stay on track through accountability and tools.
3. Build an emergency fund. Experts suggest having an emergency fund that covers three to six months of living expenses. If you haven’t started working towards this amount, start setting aside even a small amount from each paycheck. Make it a habit: decide on the amount of your emergency fund, and what you can afford to contribute. Allocate that number from each pay cheque and deposit it directly into a separate emergency fund account. Just $100 per month adds up to $1,200 in one year.
4.Talk openly about finances with friends. In general, people don’t like to talk about money, but when we talk about it, we learn from each other and help each other build financial literacy and motivation. The more you talk about money, the less shame there is around money and the more likely you are to work on your financial goals. Make it a habit: start finding and consuming resources about personal finance to increase your financial literacy, and you can share your wealth of information with friends and family. Referencing a book or blog or podcast that you’ve recently read or listened to is a great way to open up a conversation about money.
5. Focus on reinforcing good financial habits. It’s the little things that add up, and practicing good habits like packing lunch, ordering less take out, and canceling subscriptions that are unused are things you should always look at doing. Try having a no spend month a couple times a year so you can focus on saving. See if you can find a way to make a passive income to bring in extra money. Whatever you do, know that regularly practicing financial habits will get you closer to your financial goals. Make it a habit: plan out the things you can do to decrease your expenses. Write down what you saved each month and keep track of this so you can see your good financial habits add up and pay off over time.
6.Pay off debt. If you’re overwhelmed by debt or unsure where to start, consider getting help with a professional. A debt relief specialist can help you determine the best debt relief strategy for you, to conquer your debt and rebuild your worth. From credit counseling to debt consolidation to bankruptcy or consumer proposals, there is a debt relief strategy that can and will get you back on the path to financial health once again. Make it a habit: seek the help you need, and work with a professional to identify and prioritize high interest debt or debt relief solutions.
If your debt is preventing you from regaining control of your finances and planning for your future, Bromwich+Smith can help. Our Debt Relief Specialists are available for an initial free, confidential, no obligation consultation by phone at 1.855.884.9243 or request a call back at our contact us page.