First-time Home Buyer? Learn This 5 Must-know Tips Before Committing
As a first-time homeowner, having a good understanding of the home-buying process and the financial implications that accompany it. Investing in a home is probably the largest investment you will make in your life . Which is why a financial advisor may be a great resource in this situation. Here are five must-know tips that every first-time homebuyer should keep in mind before making a property purchase.
Be prepared to make a loan commitment
It is important for first-time home buyers to know the importance of the choice to purchase a home. A mortgage loan term normally ranges from 15 to 30 years, and while living in the home for that long is not mandatory, it is still a major commitment. As a result, it is essential to make sure that you are completely prepared for homeownership before taking out a mortgage.
Begin by asking yourself some crucial questions to determine your readiness. First and foremost, are you willing to commit to the home and city for at least 5 years? If not, you may want to postpone your decision until you have more certainty in your life. Second, do you have an emergency fund of at least three months' worth of expenses? An emergency fund can provide a safety net in the event of an unforeseen expenditure, such as home repairs or job loss. Lastly, do you have a steady source of income? A steady salary is essential when taking out a mortgage since it guarantees that you can afford the payments each month.
If the answer to any of these questions is "no," it may be best to postpone the purchase of a property for the time being. Continue to save and explore until you are more confident in your ability to deal with the financial obligations of homeownership. Consider whether any major events are on the horizon that may change your location, income, or expenses. A work change, a new addition to the family, or a move are examples of such situations. If any of these factors are present, it may be better to wait on purchasing a property until you have adjusted.
Stay on top of your credit
When receiving a mortgage pre-approval, you should avoid creating any additional lines of credit, such as a credit card or a personal loan. This is because lenders will review your credit history, and if they discover any new loans or credit lines, an increase in your credit amount, or missed payments, your chances of receiving final approval may be jeopardized. To minimize any dangers, make sure you pay your bills on time and avoid any dangerous or needless expenditure that might have a favorable or negative impact on your credit rating. Lenders are searching for regular and dependable payment patterns to guarantee that you will be able to make future payments without any issues. As a result, it's essential to maintain a clean credit record and avoid any major financial changes throughout the mortgage approval process.
Prioritize your needs and must-haves
While thinking of buying a home, it is critical to have a specific reason in mind. This reason will act as your compass, leading you in making educated judgments regarding the type of home you want to buy. If you want to get your feet wet in the world of real estate investment, a duplex may be the best option for you, with the possibility for rental income and the opportunity to create equity. A condo or townhouse, on the other hand, may be more suited if you are wanting to relocate closer to your aging parents, or if you are having a family, as they require less maintenance and create a larger feeling of community. After you have decided the type of home that best meets your needs, you can start focusing on the individual characteristics you need in your new home.
If you want to have children or require a home office, for example, finding a home with extra bedrooms may be a top priority. If you have pets, you may look for a property with a large yard or one near a lot of green area. It is a good idea to sit down and put together a list of the traits you desire and need in your new home in order to make your search easier. This can help you shop for homes more quickly and alleviate the stress that comes with comparing various homes. You can be able to make a more informed selection that fulfills your requirements and helps you reach your long-term objectives if you keep your reasons for purchasing a home in mind.
Define your budget and stick with it
It is essential to establish realistic expectations and recognize that no home is perfect. Even if you have an emotional attachment to the home, avoid overspending and keep within your budget. To make an informed decision about buying a property, you must first understand your finances. Keep in mind the costs of homeownership, such as repairs, maintenance, and property taxes. It is best to approach the home-buying process clearly and methodically. Engage with a reputable real estate agent and consult a financial advisor who can guide you through the process and assist you in making sound decisions. Take your time researching different communities and listings until you find a property that suits your criteria and budget. Remember that finding the ideal home is a journey, and with patience and effort, you will discover a home that meets your wants and falls within your budget.
Use a home inspection to make the most informed decision
Doing a home inspection is an important stage in the house-buying process that should not be overlooked, even if the property is brand new . The inspector's role is to properly assess the home for structural damage, wear, or pest damage. The buyer should attend the inspection to ask questions and learn more about their future new house. While negotiating with the seller, the buyer might utilize the inspection report as a bargaining tool. For example, if the inspector discovers flaws that must be corrected, the buyer might request that the seller make the repairs prior to closing or lower the sale price. If the inspector finds severe problems, the buyer should be prepared to walk away from the home. Ultimately, a home inspection may protect the buyer from future problems and guarantee that they are making an informed decision when purchasing a home.
Purchasing a house is a major financial decision, especially for first-time buyers. With so many factors to consider, it is easy to become overwhelmed and make mistakes. You can, however, make an informed decision and set yourself up for success as a homeowner by following some of these tip and consulting with a financial advisor. Remember that a little bit of research and help may go a long way toward ensuring that you make the best possible financial decision for your future.
Why A Financial Advisor Is Essential for Solving Your Financial Problems
Financial planning is an important component of life that is sometimes overlooked or neglected. Some individuals believe that with the advancement of technology, they can manage their finances on their own, but this is not always the case. Making the appropriate financial decisions may be difficult in today's complicated financial environment. That is why having a financial advisor is critical for resolving financial issues. Here are reasons why a financial advisor is necessary and how they can assist you in achieving your financial objectives.
Guidance with the right expertise and experience
The knowledge and experience of a financial advisor are crucial in managing your financial issues. They have a thorough grasp of financial markets, investment techniques, and tax regulations, allowing them to give you appropriate advice and direction. They may assist you in developing a tailored financial plan that takes your present status, long-term goals, and risk tolerance into consideration. You may make educated financial decisions and achieve your financial objectives with their assistance.
Let's imagine you have a considerable quantity of credit card debt. A financial advisor may assess your present financial status and assist you in developing a debt repayment strategy that lowers interest while maximizing your capacity to pay it off quickly. They may propose a debt consolidation loan or negotiate on your behalf with your creditors. Or maybe you are attempting to save for retirement but are not sure how much you will need or where to begin. A financial adviser may assist you in determining how much money you need to save and then develop an investing plan that takes your risk tolerance, time horizon, and overall financial goals into consideration. An experienced financial advisor can be able to navigate any kind of situation to solve any problems or questions you may have.
Customized financial plan for your personal needs
Every person has different financial requirements and goals, so a one-size-fits-all solution does not always work. That is why a tailored financial strategy is usually the best option. The process begins with an in-depth examination of your present financial condition, including your income, spending, debts, assets, and obligations. From there, a financial advisor can design a strategy that is customized to your requirements and objectives. They can help you prioritize your financial goals and devise a plan to attain them. A financial advisor can assist you in identifying the best solutions to meet your objectives, whether you want to save for retirement, pay off debt, or invest in the stock market. A tailored financial plan is an important tool for money management, and it may help you remain on track. With the appropriate financial advisor on your side, you can regain control of your finances and have peace of mind knowing you are on the right course.
Eye on the prize with a focus on long-term goals
Working with a financial advisor who is focused on long-term goals may be quite effective in resolving financial issues. Many of us struggle with money management, and it can feel like we are trapped in a never-ending cycle of debt and worry. A financial advisor, on the other hand, may change that by taking a step back and looking at your entire financial situation. They will collaborate with you to determine your long-term objectives, such as purchasing a home, starting a business, or retiring comfortably. With this information, they can assist you in developing a specific financial strategy that emphasizes your objectives and assists you in achieving them over time.
Financial advisors may also help you find areas where you can cut back on spending and provide investment recommendations that will help you attain your financial objectives. They can also help you remain on track by reviewing your finances on a regular basis and making modifications to your plan as needed. Furthermore, hiring a financial advisor may help lower stress since they can handle day-to-day money management, allowing you to focus on other parts of your life.
Outside view with an independent perspective
One of the primary advantages of collaborating with a financial advisor is their unbiased viewpoint. In contrast to family and friends, who may have their own biases and emotions at play, a financial advisor delivers an objective and unbiased assessment of your financial condition. They use their skills and understanding of the financial world to assist you in making sound judgments. A financial advisor will also take the time to learn your financial goals, risk tolerance, and spending patterns in order to create a distinct financial strategy that fits your individual needs. Working with a financial adviser may give you the confidence that you are taking charge of your finances and making sound financial decisions for the future.
Access to a variety of key resources
A financial advisor may have access to a wealth of resources that can assist you in resolving your financial issues. This can include financial software, investment tools, market analysis, and a network of financial specialists. Your financial advisor can use these tools to assist you in making educated decisions regarding your investments and financial planning. They can assess your financial condition, offer investment possibilities, and make recommendations based on your financial objectives and risk tolerance. Furthermore, they may assist you in understanding market patterns, risk management, and portfolio management methods, allowing you to reduce potential losses while maximizing prospective rewards.
A financial advisor is a valuable resource for resolving financial issues. They bring expertise, knowledge, and experience to the table, which may assist you in making educated decisions and achieving your financial objectives. A financial advisor can give you the knowledge and assistance you need to thrive in the changing financial world, whether you are a young professional or an experienced investor. Consider consulting with a financial advisor if you want to take charge of your finances. They can help you in developing a financial plan that is personalized to your specific needs and will offer you the peace of mind you want to attain financial stability and security.
How To Set Smart Financial Goals For Your Children (with Examples)
Financial competence is essential for all adults because it allows one to make proper decisions when it comes to money. A financial advisor can recommend setting smart financial goals to ensure you stay within your means or grow your wealth. However, instilling habits from an early age can ensure the highest accuracy when dealing with finances. Here are ways you can set smart financial goals for your children at different ages of their growth.
Ages 6 - 10, explaining the basics of money and transactions
By the age of six, children can begin to grasp the cause and consequence of money transactions. As a result, they begin to realize that their parents work for a living. They can also realize that things cost money and that not all purchases are made with cash. They begin to recognize there are several kinds of money, even if they may not completely comprehend how they function. At this age, children begin to comprehend that different products have varying prices. While they can not fully comprehend the pricing of some things, they are aware that some are more expensive than others.
Children at this age can start to notice that individuals have various sized houses and automobiles. You may have to answer some of those questions when you start teaching your children about money. It is an excellent time to start educating your kids that money is spent on things and services. Your children have seen you buy things, but they may not have seen you buy services. This also reinforces the notion of labor and being compensated for one's efforts. If your children do not already know what you do, this is an excellent moment to explain it to them. You can start instilling a sense of earning money by boosting your children's allowance as they become older and can accomplish more difficult chores. It may be best to also increase the number of chores they must do to earn their allowance.
Goal: Look for ways to save and the benefits
Since children are beginning to notice different patterns associated with money and purchases, you can involve your kids in shopping trips and set goals like finding the best deal at the grocery or department store. Many retailers have flyers or coupons that can be used for extra savings. You can show these different ways of saving to your kids as they help you shop. Turning savings into a game for your children can be a way of reinforcing good habits early in their development.
Ages 11 - 13, instill the importance of savings
When children reach the age of 11, they begin to acquire the ability to reason and understand the consequence of their actions. They are also transitioning from emotional to cognitive decision-making. At this age, children desire to be independent of you as well. This is an excellent moment to start broadening their financial knowledge. When teaching children about money at this age, you should start thinking about credit, debt, and budgeting. You can eventually begin to explain apps like PayPal, Venmo, and other e-commerce payment apps. However, before allowing your children to use these applications, make sure they understand the risks. When discussing payment applications and electronic payments with your children, make sure they understand identity theft.
When talking about credit with your children, highlight that if they cannot afford to pay for an item in cash, they cannot afford it and should not buy it. When introducing credit cards to your children, make sure they understand that they must be paid off each month. Now is the moment to shape their attitudes on credit cards. If you teach kids that credit cards must be paid in full each month, they will not use them to buy stuff they cannot afford.
At the mention of credit cards you can start explaining how credit works and credit ratings. You should start by explaining how debit cards function. You can also create a bill that your child is required to pay to you. You can opt to deposit that money in a savings account for your children so that they do not lose it. However, you are not required to share such information with them. The goal is to educate your children the importance of having enough money to pay their bills. It can teach children financial responsibility.
Goal: Save for a purchase
Encourage your children to save for a desired purchase, such as a new scooter or a laptop. Set aside at least a cent for every dollar earned by your child to help them save for the purchase. Writing out your savings goal may be both helpful and motivating. For example, record each week's balance on the calendar and predict when your child will attain the target. Preteens can progressively gain greater financial responsibilities. For example, at the age of 11, you may allow your child to purchase school supplies as well as pet food and toys. By the age of 13, your child could be able to purchase some back-to-school clothing and other necessities for themselves. This can reiterate that not all earnings should be spent on goods that are wanted but should be saved for needs as well.
Ages 14 - 18, translating work hours to money
At this age your children may begin working and earring a part-time income while still in school. Your child at this point may not understand taxes and how they affect earnings at this age. Taxes must be included while teaching children about money. They are critical since we are all compelled by law to pay taxes on all incomes, and the sooner your children realize this, the better off they will be. Nothing is worse than receiving your first paycheck and realizing how tiny it is. For example, your child may be expecting to get paid $13.50 per hour for 20 hours of work, which is $270. However, this is not the actual amount they would receive because taxes will be deducted.
Goal: Earn money for their purchases
This is an excellent age to urge your child to have a part-time or summer job, which allows them to build a link between hours worked and spending. Allow your child to pick a monetary goal and then translate it into hours worked. For example, assist in calculating how many hours your child will need to work in order to purchase that jacket or cell phone.
Goal: Get started with a checking Account
When your child starts their first employment, it is a good idea to open a checking account. Demonstrate how to utilize internet banking and account-monitoring applications. Comparing their digital records to their monthly statements is another crucial habit to instill in their children at a young age. Overall, maintaining a checking account will help them grasp their record-keeping obligations as well as the implications of overdrawn balances.
Starting young in your child’s development to teach them about money can further their financial future by making them financially competent when it comes to purchases, savings, and investments. Setting financial goals for yourself can extend to your children. Doing so can be a learning experience that can extend past their teens and into their adulthood as finances will follow them well past any age.
Proven Strategies To Save On Your Next Grocery And Hydro Bill (and Get Financially Smarter)
Saving on your monthly bills may be a financial goal for you right now. Savings are especially important when the economy is struggling. Having some funds in your account for a rainy day is a common tactic that any financial advisor may recommend. However, how easy is it to save on your grocery and hydro bill? Here are a few strategies that can directly help with your annual expenses. Some may seem like small changes to your spending habits but can have larger impacts in the long run.
Strategies for saving on your grocery bill
Buy generic brands instead of name brands
You can save 25% on your groceries if you buy generic brand groceries instead of name brands. Sometimes generic brands don’t taste as good as brand names, but you can work around this. For example, real Cheerios taste better than generic brands of Cheerios, but if you’re buying for a toddler, they probably won’t care. When it comes to staples like sugar, salt, flour, bleach, and many other items, for most people there is no discernible difference in quality—only in the price. You might not want to completely ignore brand name groceries—they do go on sale—however, if you can substitute generic or no name brands for brand names, you can begin to experience some real savings.
Shop at a discount produce store
Choosing a discount produce store can help you save on your grocery bills. In some cases shopping at a discount produce store can save you at least 10% when compared to more premium retailers. This again relates to the previous point above that premium priced goods does not always mean better tasting or higher quality. These discounts can be based on comparing name brand goods that are available at every retailer. By shopping at a budget produce store or a farmer's market, you may save up to 30% on fruits and vegetables. Some farmer markets will save you a significant amount of money, while others will not. Some supermarkets sell high-quality vegetables and discount stores typically sell lower-quality food at drastically reduced costs. If you value premium or organic food, you will have to pay more for it. In contrast, if your produce does not always have to be flawless, you may be able to save a lot by shopping at a budget produce store. Compare pricing at local vegetable stores, farmer's markets, and grocery stores to see if you can discover some excellent deals.
Price match with flyers or deals online
Shopping at a grocery store that price matches competitor's flyers can save you at least 10%. Bring your flyers with you when you go shopping to take advantage of this. This type of strategy may not appeal to everyone, but if you want to save roughly 10% on your annual grocery bill, this is an excellent tip to follow. Some big name grocery stores are ideal for this as some do not offer this benefit. If you are unsure it is best to ask the associate if they price match before you begin filing your basket or cart.
Shop with cash and stow that credit card away
If you leave your credit cards at home and purchase with cash, you may save up to 12% to 18%. According to some studies, those who use credit cards spend twelve to eighteen percent more than those who use cash. If you just use cash or a debit card to shop, you can only spend what you have. Shopping with $50 in your wallet is very different from shopping with a $10,000 credit limit. This will force you to make more mindful choices on your essentials rather than buying anything you may like. Try utilizing cash for all of your purchases, such as clothing, shoes, gadgets, and restaurants, and see how much you can save. If you truly want to use your credit card to earn points, stick to your food or shopping list and you may still come out ahead.
Strategies for saving on your hydro bill
Get a programmable thermostat
Heating accounts for almost 60% of your yearly power bill, and it can be observed that your expenditures grow by 5% for every degree over 20 you set the thermostat. One way to manage your heating and cooling that can help in saving on your hydro bill is by incorporating a programmable thermostat. It can allow you to set the temperature based on your schedule. If no one is home your thermostat can reduce heating and cooling. With a set schedule programmed it can turn on 30 minutes before you arrive home for a comfortable indoor temperature. A programmable thermostat easily allows you to manage your heating and cooling without having to manually take care of it, it is more like set-it-and-forget-it.
Lower the temperature in any empty rooms
As mentioned when you are not home or not using a room, there is no reason for a room to be fully heated while it is not in use. It is recommended to lower the temperature in unoccupied rooms by roughly 9 degrees Celsius and lower it by a few degrees Celsius if you are only going out for a few hours. Your programmable thermostat will be useful here, where you can set the appropriate temperature even when you are not home or you can set the temperature to lower if you always leave at the same time.
Caulk and weather strip doors and windows
A silent issue that can attack your hydro bill is the presence of drafts around any of the fixtures of your home. It is crucial that these areas are properly sealed to ensure no leakage is occurring that can cause the heat or air conditioning from seeping outdoors. Caulking and weather stripping can help keep heat inside by reducing drafts. It is recommended to seal any gaps around windows, fireplaces, doors, and the hatch to the roof area, as well as replacing the weather stripping around the garage door, mail hole in the front door, and dog flap. In some cases, it may even be better if you can block up some of these openings entirely to preserve your indoor temperature.
Wash laundry with cold water and hang it to dry
Save on your hydro bill with this simple but effective tactic. Washing your laundry with cold water is such an effective money saving technique because it preserves the electricity that would otherwise be used to heat the water that would wash your laundry. In addition, it is best to do larger fuller loads rather than doing smaller, more frequent washes. When your washer is done you can further save on your hydro bill by hanging your clothes to dry. This may prove to be difficult in the winter months where clothing will only freeze more than dry when placed outside. When using your dryer during the winter you could place a dry towel with your load. This can reduce your drying time. Just be sure to plan ahead and account for the extra space when you first start washing your laundry.
Saving on your monthly bills can translate to annual savings. These strategies can be implemented when you get home or the next time you are in the grocery store. Taking small steps and slowly incorporating these strategies can directly affect your bills and just watch your spending go down from your expenses.
5 easy steps to combat inflation in Canada
With the number of global factors that are occurring around the world, the result is inflation. Inflation causes the price of goods to be more expensive than their historical values. To cope with inflationary issues, you do not need a finance degree or to hire a financial advisor. In reality, financial advisors recommend utilizing the same sensible money-saving strategies they advocated during the boom years, such as managing spending, addressing debt, and avoiding hazardous investments.
Track your spending
Financial advisors have a common consensus and recommend budgeting to save on monthly costs, but sticking to a strict plan is more challenging than ever. While you may be able to postpone making large purchases like a car, the cost of necessities such as food and gas has risen. Creating a personal budget and listing all your expenses to create an overview of what you are spending per month. From there you can begin to identify where you are spending the most and if it is absolutely necessary. If not it can be cut out or reduced. You can do this with all your expenses, something like rent may not be changed but 5 nights out to the restaurant can be minimized. Tracking your spending can be a great way at creating better purchasing habits and benefit you during times of inflation.
Tackle debt as fast as possible
Inflation causes debt to exponentially increase because interest rates on loans are higher resulting in debts that are more expensive to pay off. Taking care of your debt can be difficult to accomplish if you do not have the plan to do so. However, a few ways in which you can implement that can lower your debt, such as paying more than the minimum monthly payment due on your credit card debt, overdraft, or line of credit. If you merely make the minimum credit card payment each month, it may take an eternity to pay off your amount. This is due to the fact that the bulk of your minimum payment will be used to pay interest costs rather than lowering the amount you really owe.
Another tactic is to pay off your most expensive debts first. Making minimum payments on all of your loans and credit cards except one is one of the finest debt-reduction tactics. Choose the loan with the highest interest rate and direct all of your additional payments toward paying it off first. Once your first, most costly loan is paid off, redirect all of the money you were spending on it to the next most expensive bill. Continue using this strategy to pay off your obligations until you are left with your least costly bill to pay off last. This technique will swiftly bring you out of debt, and you will be motivated as you monitor your progress.
Use cash-back credit cards or bank accounts
Cash-back credit cards work on the basic principle of returning a set amount of money to your pocket depending on how much you spend on purchases. This may be accomplished in one of two ways: either a flat rate or through category-based expenditure. If you use a flat-rate cash-back credit card you can get a set amount of money back on all of your transactions. If you want to maximize your spending across multiple categories, consider a cash-back card as some can earn a certain percentage on specific purchases such as travel-related spending, drugstore purchases, restaurant bills, and even a small percentage on all other types of purchases.
Cash-back credit cards are sometimes forgotten, especially when travel rewards credit cards draw the most attention due to their attractive advantages. Cash-back cards, on the other hand, provide one huge benefit that everyone may enjoy, saving money on purchases. However, keep in mind that not all cash-back credit cards are made equal. Consider the following questions while selecting a new one such as, are your purchases spread out across several categories? Can you earn the card's welcome bonus responsibly if it is available? Are you open to paying an annual fee for the card? All are possible considerations for getting these kinds of credit cards or bank accounts.
Use coupons and look for savings
With rising inflation, you may have noticed that your grocery expenses have increased but the amount of food you purchased is still the same. The cost of production has begun to rise due to inflation and it can be evident on your food bill. Fortunately, big retailers such as Metro, Loblaws, and Walmart still provide flyers, the ones your parents or grandparents read regularly for the best deals. However, you do not have to wait by the mailbox or your front door to pick up a paper copy every week to discover where you can save the most. There are available apps like Flipp that can allow you to compare costs across many retailers from a single screen without leaving your home.
These types of coupon applications allow anybody to save money on food, even if it is past its expiration date but still edible. Some of these applications also function as grocery lists. Sometimes it can also be beneficial to look for savings by choosing retailers or groceries that offer a rewards program that gives a percentage of your purchases as in-store currency for your next transaction or accumulate a lump sum. These savings may seem small by themselves but if you buy groceries every week, the savings can easily add up.
Avoid unstable investments
Inflation risk may affect all assets, although it is particularly prevalent in bonds and other fixed-income products. Bonds are the most vulnerable to inflation risk for most investors since their payments are often based on fixed rates. The buying power of your bond payment falls when inflation rates rise. Stocks, on the other hand, may provide some inflation protection depending on the sort of company you decide to invest in. Some businesses can raise the price of their goods or services as inflation rises in order to retain profit margins. However, when firms absorb increasing costs and sales stall, inflation can negatively impact their revenue and earnings. A utility may be more appealing to an investor right now than a tech business or a bank if they are carrying a large portion of the debt they owe. Investors are unlikely to see significant returns if a company's CEO is compelled to spend a large portion of its revenue simply servicing current debt. On the other side, some sectors of the market, such as commodities and commodity-related equities, as well as real estate, may gain from growing inflation. Generally, during times of inflation, it is best to avoid unstable investments.
The greatest advantage of these tips is that they can be used even in times when there are higher interest rates or inflation is occurring. In fact, by using these tips during positive economic conditions you can save even more. If you have any questions or are looking for strategies to help you in times of high inflation in Canada, speak with a reputable and experienced financial advisor.
5 Facts To Consider When Creating An Emergency Fund
When you first think about it, putting together an emergency fund seems simple. It is a rainy-day fund that is simply money laid aside for unforeseen circumstances. The goal of such funds is to be there for you if all else fails and you can not meet an unexpected expenditure with your regular monthly cash flow. However, as economic instability and inflation rise, it is important to consider how you may be as smart as possible with the cash you have waiting on the sidelines expressly for "just-in-case" eventualities. A financial advisor can let you know that having an emergency fund is important as it protects you from having to take on high-interest debt in the event you do face a financial emergency
Start small and grow your fund
Buying a less costly automobile the next time you go car shopping and reducing your cell phone service are two simple methods to support your savings strategy. Skipping that two-week vacation, reducing your eating out spending, and saving your next raise or bonus are all feasible ways to increase your emergency fund. The strategy is to make consistent contributions to the fund. Ideally, you should approach it like any other monthly recurring expenditure. Set away the right amount of money from your paycheck.
When creating your emergency fund you do not have to go full force and save large lump sums at a time. If you can then that is great but you can start small when you start building your emergency fund. Any change from the day or week can be put aside into a physical jar. You could also reward yourself by contributing a few dollars to your emergency fund instead of eating out. Put money into your fund if you earn cash back on your credit cards or just paid off a large obligation, such as a personal loan or a vehicle. If you receive a tax refund, deposit it into your fund. By starting small you can develop a habit of saving and before you know it your emergency fund is ready to tackle any kind of issues that may come up.
The size of the fund is ideally three to six month’s worth of expenses
When making an emergency fund the common goal to reach would be to save the equivalent of three to six months of expenses and turn it into savings. The two elements that are generally recommended when creating an emergency fund are to define your individual emergency case. In other terms, what will the emergency fund be used for? It can be used for urgent repairs to the home or vehicle, unexpected medical expenses, or lack of income due to job loss. By having a clear definition as to what the emergency fund will be used for you can ensure proper use of that account. Another consideration is that depending on your earnings and how you define emergencies, the three to six months of expenses saved could turn into eight to twelve.
Each person's financial situation is different as some individuals can live with three to six months worth of costs such as rent, mortgage, vehicle payments, and bills in savings. However, someone that may be the sole provider for their family, self-employed, or indisposed from working may benefit from a larger emergency fund. Ultimately, the goal is to have enough to support yourself in the case of unplanned expenditure. The amount saved can be larger or smaller for everyone but having some savings is preferable to none. If you can not save three months’ worth of expenses, having one month’s worth towards your emergency fund is still ideal. In contrast, if you already have a well-funded emergency fund, consider adding to it to protect yourself from any unexpected bills.
The emergency fund should be, for the most part, liquid
There are a number of things you can do with the money that you earn. Some may invest their money into stocks or promising ventures while others may choose to stow them away in either a bank account or their mattress. However, when creating an emergency fund it is best to keep the money liquid. When an emergency does occur you want to be able to access that money quickly and without incurring penalties. You may have saved the recommended six months’ worth of expenses but diversified the fund and have three of the six months invested. In this case, it is completely okay to do since you still have access to a large portion of money when you need it. However, if you would like faster access to your fund but still have it growing you can place it in a high-interest savings account.
Do not let the fund sit idle
It is best that your emergency fund is mostly liquid, but it also should not just sit idle. When creating an emergency fund another important consideration is where you should place it. Having your savings sit in a regular account may diminish due to inflation and balance that concern the need to keep your money accessible. The best way to battle inflation and the loss of value of your emergency fund is to place it into a high-yield savings account. This account can allow you to very quickly take out the cash if needed but also earn as much interest on the lump sum of cash while not taking any risk or locking it up in a way that would be difficult to withdraw or where there would be penalties in doing so.
Put it into practice, only use it for emergencies
Even if you've successfully developed an emergency fund, forgetting why it exists could jeopardize your hard-earned financial savings. The main purpose of these savings is to serve a purpose of helping achieve a goal. When creating an emergency fund it is vital to keep that purpose in mind so that you can stay on track. The issues arise when you may begin to lose sight of the reason why you are saving money in the first place. The goal of emergency money is to keep you financially afloat during difficult times. Putting that money toward anything else, such as a trip or a wedding, might put you in financial jeopardy if an accident or emergency strikes.
Staying on track entails identifying and adhering to the criteria of an emergency. This goes back to clearly defining what counts as an emergency in your personal situation. An emergency for one person may not be an issue for another. It can be viewed that a transaction is not considered an emergency. A short weekend getaway would typically not fall into that criteria. Setting money away for such goals is a good idea, but using your emergency fund to cover them is not. If you are honest about what constitutes an emergency for you, you will be able to rely on your emergency fund for years to come.
Emergencies are disruptive, but they should not interrupt your life. However, to do so, you need to be prepared. You will be able to make progress toward what is most important to you while handling the financial curveballs that life inevitably throws if you have an emergency fund as well as separate funds for short- and long-term objectives.
5 Effective Tips To Set Lifetime Financial Goals From An Expert
Your financial goals are the specific monetary amounts that you intend to attain in order to accomplish your life vision. Financial objectives, like any other goal, should be connected with your long-term plans, whether these plans involve paying for children's education, sustaining a specific retirement lifestyle, or paying off and keeping out of debt. A financial advisor can tell you that good financial objectives are specific, measurable, attainable, relevant, and time-bound. For a variety of reasons, generic goals may be unlikely to motivate you to attain them. Here are 5 effective tips to set financial goals:
Set a budget
Making and sticking to a reasonable budget is a desirable financial goal in and of itself. Without a budget, you will struggle to fulfill your objectives. Budgeting abilities are essential for money management and financial planning. Your financial goals are part of your total financial plan, and your budget allows you to analyze and alter your plan as needed to meet your objectives. Your budget will also provide you with a sense of control over your financial situation, as well as the confidence to persist in the face of financial hardship. Another benefit of a budget that is sometimes missed is its utility as a communication tool. As an example, you and your spouse disagree on your spending habits. The ability to give verifiable proof of the family's spending patterns may help you make the case for cutting less on certain activities and putting them towards savings.
Make a realistic plan
Your financial goals are unique and specific to you. It is common to find that some goals are easier to achieve than others. To create a realistic plan identify financial goals that align with your ideal life. Categorize your goals into a time period of short-term, mid-term, and long-term. Setting time frames for your goals will make it easier to strategize to achieve them.
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Short-term
Short-term goals usually range from 3 years or less and are usually created for items you wish to afford in the near future. A few examples are a home renovation or a vacation. Short-term goals can also be set for items that can contribute to the mid-term and long-term aspirations.
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Mid-term
Mid-term goals range from 3 to 10 years and may include boosting your credit score, or getting funds to start your own business. You might want to look into passive income options or engage a financial advisor to assist you to plan your retirement. Each of these examples of mid-term financials acts as a stepping stone to a greater goal, a long-term objective.
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Long-term
Long-term goals, such as guaranteeing financial stability in retirement or paying off your home, are further down the road, ranging more than 10 years. Long-term financial goals may comprise numerous short-term or mid-term objectives. Breaking down enormous goals into smaller, more urgent ones is always a smart idea and makes them more manageable objectives.
Turn it into a habit
One of the best ways to reach your financial goals is to change your mindset. You have to be willing to stick to a plan that extends a lifetime. However, building new habits can be difficult and can be more daunting to think about having to maintain them for the rest of your life. It is always best to start small and work your way up when trying to create a new habit for yourself. You can begin with a short-term goal which can be two weeks of keeping a budget. Once you achieve that you can extend the timeline to 30 days, half a year, and then to the point that it is integrated into your routine. Building habits is easier said than done, and if you are struggling you can turn your budget into a challenge or a game. When you complete a task you can reward yourself. As an example, you could implement an envelope system where you place cash in envelopes for specific expenses and have one envelope for your personal savings and spending. No matter what challenge or game you set for yourself, you tailor that habit into your lifestyle and what you want to save for.
Always evaluate and reassess your plans
Similar to your personal situations, your plans should evolve and change with you. When financial goals and plans are set for a certain period, routinely assess them. Check to see if you are on track or if it needs refinement, and make an adjustment so you can set yourself up for success. Having a way to keep track of your progress is important to visualize where you are succeeding or falling short. This could mean creating a spreadsheet, using a journal, downloading an app, or meeting with a financial advisor. Seeing your progress visually can be a significant motivator and makes planning that much easier.
Use available tools and resources
You have tools for practically every sort of financial objective at your fingertips, from direct deposits to savings accounts and autopay alternatives for credit cards to budgeting programs that link to your accounts and update in real-time. Some are free, while others need a registration, they also have varying perks and features. You must evaluate these resources depending on your objectives to see whether the benefit exceeds the expense or, more crucially, the time required to set them up and learn how to utilize them. These software tools, like any other tool, cannot accomplish everything for you. To ensure that everything works as it should, you will need to routinely monitor your transactions and accounts, as well as be mindful of app settings and notifications. One of the best resources to implement to reach your financial goals is consulting a financial advisor. They can greatly assist you if your finances have grown more complicated or you may want personalized advice to help increase savings or pay down debt. Whichever the case may be, a financial advisor is a resource worth considering.
It can be quite difficult to achieve perfect, linear progress toward any of your goals, but the key thing is to stay consistent. If you have an unexpected auto repair or medical expenditure for one month and are unable to contribute to your emergency fund but must withdraw funds from it, do not be too hard on yourself, that is the main purpose of an emergency fund. Simply get back on track as quickly as possible. you can evaluate and adjust your goals, as well as track your progress toward them as life's ups and downs occur. Throughout the process, you will discover that both the minor things you do on a daily and monthly basis, as well as the larger things you do each year and over time, can help you reach your financial objectives.
How Can I Save Money to Keep Up With Inflation?
With the effects of rising inflation, many sectors in a number of industries have seen prices rise. A financial advisor can help you navigate through such times by investing in what matters and guide you in preparing for the future. However, as a consumer you may be feeling the effects of inflation with the rise on everyday products like groceries, gas, and transportation. Here are a few areas where you can save to keep up with inflation.
Save on utility bills
Electricity bills are an area you could potentially save by cutting down. Electricity bills may be noticeably higher in the summertime with the use of A/C units. You could consider shutting off your A/C and turning on a fan in its place. Typically an A/C unit requires a lot of power to operate but in the case when temperatures are not extreme, turning them off and using fans instead can keep your space comfortable and save you money. Another contributor to your electricity bill is your washer and dryer. There are no substitutions to needing to clean clothes but there are ways to make the process less costly. One way is to always follow the specified time-of-use pricing for washer and dryers to avoid the premium for cleaning at those times. However, you can skip the drier entirely, if you have a large enough backyard you can set up a clothesline to dry your clothes with the hot summer air. Lighting is another area of a home or property that can quickly become expensive. Lights that remain on after you fall asleep or if you forget to turn them off end up wasting your money. The use of both smart lights and energy efficiency bulbs that use less wattage can all contribute to energy saving costs. Having timers and schedules setup can help with extra savings, which may not seem like a lot but all add up.
Cut costs at the grocery store
Grocery costs have seen a significant increase in cost. All food categories have experienced the effects of inflation, with certain foods being hit harder. Higher cost food include meats, fruits and vegetables, pasta and rice. With the current state of inflation it does not appear that food prices will stop rising. Some tips to save money on groceries include:
Select cost-effective foods
Meat prices are among the highest attributed to inflation, so eating more vegetarian meals is one method to save money on groceries. Meals may be built around low-cost essentials like pasta, rice, dry or canned beans, potatoes, and eggs. Canned and frozen fruits and vegetables are less expensive than fresh, and substituting generic items for name-brand products may also help you save money without seeing a significant difference.
Meal plan
Make a weekly food plan to minimize impulsive purchases or depending on takeout during the week. To save even more money, look for recipes that incorporate ingredients you already have in your cupboard and fridge, or plan meals using the weekly sales flier from your grocery store. Stick to your shopping list as much as possible, and go to the supermarket with a full stomach to avoid tempting impulsive purchases that might derail your food budget.
Take advantage of deals and discounts
The weekly flier of your grocery store is filled with deals and discounts that can be easily taken advantage of. For items that have a longer shelf life like canned food, they can be bought in larger quantities when they are on sale. For perishables only purchase the essentials that coincide both your budget and meal plan.
Save money on transportation
Another rising expense is the cost of transportation as gas prices have spiked in cost. If rising gas prices are blowing your budget, your first step may be to minimize your driving as much as possible. If your job permits it, request to work from home more frequently. Running errands in batches, carpooling, or using green transportation choices like public transportation, bicycling, or walking anywhere within a short distance will all help you save money. By taking advantage of fuel savings programs at your local gas station, you may be able to save money at the pump. Many gas station companies, for example, offer incentives for joining up for text messaging. A petrol rewards credit card may also allow you to earn points or cash back on gasoline purchases. Finally, think about decreasing the cost of your auto insurance. Based on variables like your driving history, you may be eligible for a cheaper vehicle insurance quote than you are currently paying. Compare vehicle insurance quotes, and select one with the appropriate benefits with lower costs.
Plan ahead for cheaper vacations
Inflation, rising costs of fuel and the increase in demand because of lower post-pandemic restrictions have all contributed to the higher airfare cost. Along with more expensive airfare, there have also been noticeable increases in dining, hotels, and gasoline prices as well. All contributing to a more pricey vacation compared to recent years. If you have the choice, it may make sense to postpone major vacations. A staycation, in which you remain close to home and visit local sights, take day trips, dine at local restaurants, and relax at home, can save you a lot of money today, making it simpler to enjoy your ideal vacation without incurring debt later on. If you want to travel this year, prepare ahead of time for a trip you can afford. Book your tickets early, ideally at least six months in advance, and compare travel prices using internet savings tools. Since costs fluctuate based on the day of the week, having flexible travel dates will help you find the cheapest tickets. You may also save money by using a travel rewards credit card, which gives you a portion of your purchases back in the form of points or miles. Redeeming your accumulated points or miles for flight and hotel reservations may save you a lot of money on travel, as long as you avoid incurring interest charges that cancel out your benefits. Inflation raises the cost of essential housing, electricity, food, and transportation. If your budget is under pressure, devise a plan to decrease expenditures wherever possible. Credit management can be made more difficult by economic hardship, this can be where a financial advisor may be most beneficial. They can help navigate through the current economic climate while also planning for the future.
5 Types of Life Insurance in Canada Explained
Life insurance is a key aspect of many Canadians' overall financial strategy. It can assist your specified beneficiary, such as your family, with replacing your income and carrying out their plans in your absence, such as going to university or retiring. However, there are different types of life insurance policies specified for different needs. Since there is no general life insurance policy that can encompass all needs and requirements. Each type of life insurance policy should be considered carefully as they are accompanied by different varying advantages.
Term life insurance
Term life insurance is a form of life insurance coverage that protects you for a certain period of time, known as a term, and gives your dependents a tax-free lump sum payout if you pass away within the term. Some common term length options for life insurance include 10 or 20 years, with some lengths of 25, 30 years and up to 65 years of age may be available. Some Canadian life insurance providers can even enable you to choose your own term of coverage. You may be able to select a certain number of years for the term life insurance coverage to last. These are known as "pick-a-term" products.
There are advantages to protecting yourself for a set amount of time. Your life insurance death benefit can meet the majority of your short-term life insurance demands. This might involve financial circumstances like your mortgage, any outstanding debt you may have, school coverage for your children, or living expenditures for your loved ones so they can keep the same level of life if you pass away. Convertible term life insurance is also available in some term policies. Convertible term life insurance allows you to convert your existing term life insurance policy into lifelong or permanent life insurance before reaching a certain age.
Whole life insurance
In Canada, whole life insurance is one of the most popular forms of life insurance. It covers you for the rest of your life as long as you pay your premiums on time. As a result, whole life insurance is often known as permanent life insurance coverage. A whole life policy, in addition to offering a fixed payout whether you die young or elderly, contains an investing component. A percentage of your premium payments is placed into a savings component known as "cash value."
The cash value of your insurance rises with interest over time and serves as a financial safety net in times of uncertainty. You can pay your premium using the policy's cash worth, borrow against it, or remove it partially or completely. This can be done to help you get through a hard financial period. You can even surrender the insurance later in life to live off the proceeds.
Universal life insurance
Universal life insurance is comparable to whole life insurance, with the exception that it includes a self-directed long-term investing component. Your insurer provides you with alternatives for investing the cash value of your insurance, which may be used to save for retirement. If you are a knowledgeable investor or are concerned about estate planning, universal life insurance may be a more intriguing alternative. However, universal life insurance policies need more hands-on work than other types of life insurance coverage and may not provide the same rate of return as other investment alternatives.
Mortgage life insurance
Mortgage insurance guarantees that your mortgage lender collects the remaining balance of your loan if you were to pass away. In other words, the payment is made to the mortgage lender rather than your family.
The payout amount corresponds to your outstanding debt. The result is, that it decreases over time as you pay down your mortgage. The insurance rates, however, stay constant during the policy period. Since mortgage insurance is rigid in terms of who receives the death benefit, a term life policy with adequate coverage to pay your mortgage may be a better deal. If the mortgage is reduced, your beneficiaries will get some cash even after the mortgage is paid off. They can also utilize the payoff in any way they see appropriate rather than paying the mortgage in full.
Mortgage life insurance has certain advantages with the most noteworthy benefit being that it does not need a medical examination. If you have a severe medical condition that makes life insurance impossible, your only possible option is to get mortgage life insurance to safeguard your home financially.
Group life insurance
Group life insurance is one of the most common forms of life insurance that insurance companies provide to their employees as part of their employee benefits package. Group life insurance, just like other insurance policies, offers advantages and cons.
Convenience and acceptability, are some of the major advantages of group life insurance. Registration in group life insurance can sometimes be automatic or require paperwork to be completed. Additionally, group life insurance may not need a medical exam, which is especially advantageous for employees who are older or have serious health conditions.
As beneficial as group life insurance is, depending completely on it may not be advisable because it cannot be taken with you if you change employment. Some insurers allow policyholders to change their group life insurance into individual life insurance if they quit. A group life insurance policy tends to be a one-size-fits-all option. In result, it cannot be tailored to your specific requirements.
With varying types of life insurance, there is not a one-type-fits-all kind of policy, it all depends on your unique needs and situation. In the event that you have any doubt in terms of which life insurance is right for you, it is advisable to contact a knowledgeable advisor. With their expertise, they can assist you in figuring out which type of life insurance is the best fit for your needs.
Why work with a financial advisor?
Life is about enjoying every last moment, and reaching your financial objectives allows you to do exactly that on your own terms. A devoted financial assistant can help you get closer to the ideal lifestyle that you want for yourself. And, because our finances affect practically every part of our lives, a financial advisor may have a beneficial influence not just on your personal financial well-being, but also on the financial well-being of your family members, future generations, and even our society. Having said that, hiring a financial counselor is really beneficial. Here are some of the numerous advantages of working with a financial advisor.
Help with Preparing for the Unexpected
You can't anticipate the future, but you definitely can plan and prepare for it. To stay on course, your financial advisor may work with you to create a plan ahead of time by considering predictions for issues such as inflation, long-term care, market drops, and health care. For example, most people who deal with a financial advisor stated it offered them more financial security during the COVID-19 pandemic. Whatever the situation may be, with a financial advisor by your side, the chances of you being caught off guard and unprepared financially will be kept to a minimum.
Guidance in States of Distress
Keeping emotions out of your investment decisions might be tough during times where the market is unsteady and unpredictable. Stock market headlines may make even the most experienced investors uneasy, with all of its unexpected twists and turns. That's why working with a financial adviser who can help you establish a specific investment plan based on your goals, risk tolerance, and time horizon is what's best for you. These people will make you considerably less likely to respond to severe market situations by making rash and spontaneous decisions.
Promotion of Financial and Physical Wellness
Financial planning is only one aspect of long-term preparation. Building a solid financial plan also includes you and your family's health and emotional well-being, since facing financial uncertainty may be stressful. Financial experts are prepared to assist you in managing your financial, emotional, and physical well-being. That's why when you decide to work with a financial advisor, it's critical to choose a finance specialist that is a good fit for you and has the necessary expertise and capabilities. With that being said , before you begin working with a financial advisor, it is advisable to ask them some questions about what they do.
Help with Creating Financial Plans for you
A bewildering number of goods and investing methods are available in the financial sector. A financial manager can help you reduce the confusion by identifying reliable and diverse investment products, developing a customised financial strategy that works for your goals and risk tolerance, providing the support and insight you need to feel secure, alerted, and in command of your future, and communicating with you to keep you on track with your life. Furthermore, by collaborating with tax professionals and insurance specialists, a financial advisor may enable you to take your financial goals to the next degree. Your team of partners can work together to develop a complete strategy for attaining your objectives.
Reassurance with Calculated Decisions
The ups and downs of the stock market might lead to impulsive financial decisions. A financial counsellor, on the other hand, can help you stay on track and, if required, modify your plans. Rather than just reacting to short-term market changes, they will do so based on data and the advice of professional market strategists. By doing this, the chances of you falling off track of reaching your goals is little to none. These people will focus on making decisions that will reassure you that you will reach your long-term goals, which is why you need them in your life.
Puts your Money to Work
Financial planners assist clients in increasing their assets in areas where their money will generate them more money. People who work with an advisor put more of their money into non-cash investments, which means that more of their money is working for them. People who have a financial advisor save far more for their future and profit from the better growth potential of their non-cash possessions. This demonstrates the value of working with an adviser.
Hiring a financial advisor is beneficial and can make your life less stressful. Not only do these people create financial plans that cater to your life and are based on true data, they also help prepare you for the unexpected and guide you through times of stress. Furthermore, advisors also value your emotional and physical well-being because they believe that those aspects play a big role in your financial situations. On top of all of that, these people help you put your money to work, which means that they help you invest in non-cash investments that bring in revenue. These are just the many benefits that financial advisors provide so work with one today.