Top New Years Resolutions to Improve your Finances in 2021
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Ah a new year, a fresh start and a time filled with hope and ambition. How many times have set New Year’s resolutions with enthusiasm only to fall off the wagon by February? Did you know if everyone with a membership actually showed up at the gym regularly over the entire year, no gym could handle the capacity? They get human nature and are able to use that to their advantage.
Every year Canadians make resolutions for their health, their career or business and of course, their finances. Let’s take a look at the top 5 financial resolutions according to CNBC Select and some tips to help you actually keep them in 2021.
#5 Pay off my credit card on time. 24% of responders set this as their new year’s financial resolution. This one is totally one you can keep with a few easy steps. First, find out your billing cycle and when your monthly payment due date is. Mark that date in your calendar as a recurring appointment. Keep in mind that online bill payments can take 5 business days or more, so put in your calendar to make your payment at least 5 business days in advance. See if you can line up the due dates with your paycheck so that you can set up automatic bill payments on paydays. If the goal of paying off your credit is to improve your credit rating, at very least be sure to make your minimum payment before the due date. Keeping your credit card balance under 50% of the limit significantly boosts your credit score and overall report.
#4 Pay off credit card entirely. According to a New Year’s Resolution Personal Finance Survey from Willful, 46% of Canadians have “pay off debt” on their New Year’s Resolution list and 60% of Canadians carry financial. There are several really great methods for paying off debt completely on your own and reduce credit card balances. Dave Ramsey is famous for The Snowball Method. Paying off the highest interest debt first then working your way down to the lowest interest rate is another common method. If these DIY methods do not set you up for success, get some help. You could reach out to your bank for a consolidation loan or refinance your mortgage. Both of these options have pros and cons and you need to really do your research, run the math and be sure they are actually putting you ahead. A federally regulated debt forgiveness program may benefit you. Speak to a Licensed Insolvency Trustee firm like Bromwich+Smith for a consultation and guidance.
#3 Create a personal budget. On average, about half of all Canadians have or use a budget and the other half, set new year’s financial resolutions to get on one. Finding the joy in budgeting can be challenging and hold us back from actually doing one. To be successful, first of all establish why you are doing a budget. If it’s for the sake of it or because you know you should, you will not be compelled to actually do one. Tie it to a financial goal or a value of yours and see how that motivates you and keeps you steady. Secondly, do not over complicate it. There are tons of apps, spreadsheets and methods you can use for personal budgeting. At the end of the day, you just need to track what is coming in and what is going out. Then you use that – your budget- to determine what’s left, what is bleeding your budget, where can you save money, do you need to increase your income and all other things money and finance. The budget is the foundation to your financial success. Keep it simple and tie it to your why.
#2 Improve my credit score. It’s fantastic that now, more than ever Canadians are clued up about improving their credit report and their credit score. It can, however, have us obsessing over a number which is not necessarily the same in all cases and only part of the entire picture. A good credit score is important but if the purpose is so you can be approved for the best rates and best terms out there, then you need to know that lenders are looking at your entire credit report not just your score. Three easy tips to improve your credit score and overall credit report are; 1. Never carry a balance greater than 50% of your limit 2. Always make your payments on or before the due date, never late 3. Use credit cards not just loans.
#1 Save more money. The top financial resolution is to save more money. If you are combining saving more money with earning more money and paying less out, you are in the golden triangle. Saving for emergencies, children’s education and for retirement are the top reasons Canadians save money. Travel, less so in 2020 of course and luxury items are also lower on the list of what Canadians save money for. Start out by finding out what your employer has to offer. Do they match your savings or RRSP contributions? Does your employer offer special interest rates with a particular institution? Do not leave money on the table at your job. Once you find out what your employer offers, set up an automatic debit directly from your paycheck to cause a forced savings and allow your money to grow faster with matching. Many banks offer several bank accounts at no fee. You could set up a different account for each of the thing you are saving up for and transfer or auto transfer money into each account every month. Look for high interest savings accounts and also look at other options. If you’re in a position to save money, consult your independent financial planner and look at options to save and invest. To find money to save, try putting aside money from recycling bottles (where available), or found change or even your CRA refund checks. A great way to save more after you have leaned out your spending is to increase your income and put that additional income aside for the items you are saving for. Reduce your debts, increase your income and increase your savings and you are well on your way to financial success.
Happy New Year and we, at Bromwich+Smith wish you every success in keeping your financial New Year’s Resolutions. We’d be happy to delighted to help you.
Licensed Insolvency Trustees, Bromwich+Smith have debt relief specialists available to offer debt advice and debt restructuring entirely from the comfort of your own home. Now offering video appointments with clients, Bromwich+Smith’s Debt Relief Specialists are available for initial free and confidential consultation by phone at 1-855-884-9243 or request a call back at contact us page.