- Revisit and Redefine All of Your Goals
It is the start of a brand new year and a great time to revisit and modify all of your goals and dreams! What short term and long-term goals do you want to accomplish in 2011? When a new year arrives it gives people a new excitement and hope about what they want to accomplish. Getting into shape and quitting some not so great habits are among the most popular new years resolutions but what about financially? Start setting your financial goals early and not just “I want to have less debt in 2011”. Define your goals and be specific. How are you going to have less debt in 2011?
2. Get a Plan In Place
A financial plan is more then just managing your investment account. If you can get a good financial plan in place this will really look at the big picture. Everything from retirement or education saving plans, revisit insurance and investment portfolios, debt freedom dates, goals and dreams you want to accomplish in your life. This will get you on track to your financial independence! You do not need to be a millionaire to get one of these done there are a lot of great financial advisors that will do this complimentary!
3. Get Some Professional Advice
Although many people feel that they can manage their finances all on their own, it is a lot to handle in today’s busy world. There are some great financial advisors out there that want to get you back on track and they are not only looking for people with thousands of dollars to invest.
4. Create An Emergency Fund
How many of us rely on our credit cards when an emergency comes up? (Leaky roof, car troubles, parking ticket,) In case there is a major change in your life for example, (becoming unemployed) You need cash to live on! Typically financial advisors recommend that you keep 3-6 months of living expenses in a safe short-term mutual fund like a money market account. Relaying on an RRSP or credit cards are not a great idea for an emergency fund because there are usually fees when it comes to withdrawing from your RRSP and credit card companies charge very high interest rates.
5. Plan For Retirement Now
For some of us retirement is a very long time away and for some of us it is just around the corner. The fact is the earlier you start to prepare the better off you are going to be and not to mention the earlier you can retire! A good financial plan will show you what you need to do to be able to retire comfortably. How much you are going to need to live on etc.
6. Know Your Risk Tolerance
First of all you want to make sure that you have a good financial advisor who has your best interest in mind and not their own! Your financial advisor should be able to help you with this by stating reasons why you want to be in certain funds. Depending if you are in it for the long term or short term is a big factor. I would not recommend that you would want to be in a high-risk fund unless you are an active investor and have vast knowledge of the market. There are many great funds that perform 8%-11% and they are low to moderate risk levels
7. Get Protected
Review your insurance policy, incase your situation has changed. You might be over protected or under protected. If you do not have any in place and you now have dependent children and a mortgage it is very important that you get this done for the sake of your family. If you have read my other posts you should know which kind of income protection I recommend. The purpose of life insurance is not to have it for your whole life. It is to replace the income brought in by the breadwinner so your family will not suffer financial devastation along with the loss of a family member. Income protection is for the early years of life when you have a mortgage and a family to support, so god forbid if something happens to you, your family is not left with debt that they cannot afford.
8. Debt Consolidation
A debt consolidation is a great way to wrap up all of your debt, (mortgage, credit cards, car loans etc.) into one lower payment each month. Instead of taking the extra cash and getting yourself in to more debt take the majority of what save and put it back towards the principle. The extra that you have left over put in into you savings account or emergency fund! By doing this you will be out of debt much sooner and you will have accumulated a good amount of wealth in your RRSP or TFSA when you become debt free.
9. Create a Will
We don’t like to think about this but it is something that is necessary. I’m sure the last thing we want is the government or lawyers determining where are wealth goes when we pass on, therefore we need an updated will in place so we can control where it goes.
10. Continue to Self Improve
Although this may not be a financial tip by continuing to raise your awareness level will help you achieve certain financial goals. Reading is a great way to self improve even if it for only 15 minuets before bed. There so some great books on managing your personal finance.