5 Tips for Renewing Your Mortgage
With the most popular mortgage length in Canada being 30 years, chances are you will need to renew your mortgage term at least a few times before your home is fully paid off. If you are renewing your mortgage, the best-case scenario is to renew your mortgage on a new term with a lower mortgage rate.
Even though mortgage rates are directly tied to the policy interest rate set by the Bank of Canada, there are steps you can take to help ensure you get the best mortgage rate at the time of renewal.
These include:
1. Take a holistic view of your finances
When the renewal forms from your current mortgage provider arrive, you should look at your current financial state and where you plan on being in the next 3-5 years. Ask yourself, does my current mortgage provider offer a product that works with my goals? For example, if you know you will be looking to move to a new home, city, or even downsize/upsize in the next few years, it wouldn’t make much sense to sign a five-year fixed-rate mortgage. Perhaps look for a 3-year mortgage instead.
If the new mortgage product offered to you will not go against your financial plans, accept it.
2. Don’t wait until the last minute to shop around
You should begin the process of looking into other lender’s rates a few months before your mortgage matures. You can even ask your current lender for their quote at this time. This will help avoid a last-minute scramble to find a new mortgage provider if you do not come to a new agreement with your current provider.
3. Request a better mortgage rate
Your existing mortgage provider will send you renewal forms or even give you a call in an effort to lock you into the current going rate. Quite often this works, as people are comfortable renewing with their existing provider, it is easy for them, and the rate is the same as what is advertised on their website. However, the posted is hardly ever their best rate and if you request a better rate for being a loyal customer chance are you will get one, especially if you are in good standing and have made all your previous payments on time. If you are told they cannot offer a better rate, ask if they will match a quoted offer from another institution. This is where the data you collected from your research early on can pay off.
4. Use a mortgage broker
When shopping for a better deal to refinance your mortgage, contacting a mortgage broker saves you
time and stress. Mortgage brokers work for you and not the lenders, their main goal is to get you the best deal possible so you will sign with one of the providers they represent. A mortgage broker will provide you with a comprehensive list of lenders and their rates. This will save you’re the time and energy required to get multiple quotes yourself and will allow you to switch lenders easily and with peace of mind.
5. Start the re-mortgaging process early
On occasion, you may not want to renew with your existing provider. If this is the case and you wish to switch lenders. Do not wait until your mortgage matures, start your research as early as possible. The process of switching your mortgage provider is very similar to that of applying for a new mortgage. You will need to submit paperwork including a copy of your mortgage renewal letter, proof of income, proof of homeownership, and proof of property insurance. The new provider may take some time getting back to you with a rate and approval notice, so starting early affords you the time to complete the process without having to worry about running out of time.
In short, do not renew your mortgage without considering your options, and seek the assistance of a mortgage broker so that you will not need to do all the heavy lifting and research on your own.
5 Tips to Get Approved For a Mortgage
Owning a home of your own is a goal that many individuals have set out for themselves, the process of achieving this goal isn’t always simple. First, the decision needs to be made that it is time to jump into homeownership, then you need to find your ideal home, make an offer on the home that gets accepted, and finally qualify for a mortgage. The process can be as overwhelming as it sounds at times, but if you are well prepared the process will go a lot smoother.
If you are a first-time home buyer looking to realize your goal of homeownership, we can’t help you find the perfect home but we can help you qualify for a mortgage by utilizing the tips below.
1. Assess Your Credit Score
Your credit score is not the only factor that is used by mortgage lenders when assessing an application, but it is an important factor. Knowing your personal credit score prior to applying for a mortgage will give you an early indication if your application will be approved. The minimum credit score usually considered for mortgage approval is 660, but that doesn’t mean you are automatically approved with a higher score or declined with a lower score.
2. Prepare for a Down Payment
Having a significant down payment for the purchase of your home is a positive in the eyes of the lender, this shows that you have prepared for the purchase and have some personal equity involved in the purchase. It is unrealistic to approach a mortgage lender without having a meaningful down payment. In addition to your credit score, your down payment size also plays an essential role in getting you approved. Having a down payment of around 20% of the property value will greatly assist in your mortgage approval.
3.Your Income Matters
It is extremely important to provide evidence of a steady flow of income to repay the mortgage. Lenders will likely not be willing to approve an application by an individual that does not have the annual income to sustain the property being purchased. Avoid changes in your career prior to your mortgage application, if you are thinking or changing companies or starting your own business, hold off until you have possession of your home. Lenders do not like uncertainty in employment.
4. Pay Off All Existing Debts
Another way to get approved for a mortgage fast is by paying off your existing debts. When you
are debt-free, it will boost your chances of getting quick approval. A lender may refuse your application if you have too much debt as they may feel that you do not have the capacity to make all of your payments on time. Keeping a nil debt profile will affect how much you can borrow, as it also affects your credit score. More debt means lower chances of getting approved.
5. Get Pre-approved
Contact your mortgage lender for financial evaluation and pre-approval. The process considers your financial status, and it is valid for 90 to 120 days. The assessment of your financial situation and a pre-approval will help expedite your search for the perfect home as you can focus on properties that are within your pre-approved price range. This will also help you move quickly on making an offer on a home you like, as you know you will be approved for the mortgage.
How Do I Build an Emergency Fund?
No life is without its hassles, being able to successfully withstand any unexpected financial challenges will reduce worry and provide a positive outlook. Building an emergency fund is a great way to reduce the impact from unforeseen financial challenges that may pop up in the future.
What Is an Emergency Fund?
An emergency fund is basically money set aside, most often in a separate bank account to help take care of unforeseen expenses. That can arise including medical expenses, major car repairs, emergency home renovations, home-appliance repair or replacement, sudden unemployment, or a pandemic. Not having emergency funds set aside to handle these unforeseen issues can lead to high levels of stress, frustration and may leave you feeling helpless.
Building an emergency fund is not always simple, it requires planning and a strategy. Seeking the support of a financial advisor for advice and guidance can help make the journey more manageable.
How to Build an Emergency Fund?
There are a lot of differentiating strategies online about how to go about building an emergency fund. Some of it may be confusing, or slightly overwhelming. Here is a simple guide on how to begin.
Contact a Financial Advisor
It is best to contact a professional for guidance to help you set goals and to achieve them. A financial advisor will ask you several questions about your current financial situation and will help design a feasible plan.
Decide How Much to Save
Having a targeted savings amount and a time frame to achieve your goal may help keep you on track. Based on your consultation with the financial advisor which should have included your income, expenses and current savings, a goal can be set based on the figures which include weekly and monthly amounts.
Where to Put Your Emergency Funds?
An important decision that your financial advisor can assist with, is where to put your savings. Will you choose to keep it in a savings account, or perhaps an RRSP (Registered Retirement Savings Plan) or a TFSA (Tax Free Savings Account) or some other form of investment account. This decision needs to be made based on what your goals are, just remember the purpose of an emergency fund is to have quick access to funds to help handle any unexpected financial needs, so don’t tie up your funds in a long term investment.
Automate Your Savings
The easiest way to ensure you remain on track to achieve your emergency fund goals is to have a standing order on your daily banking account to enable a preauthorised amount to be automatically transferred into your emergency fund account or investment monthly.
Takeaway
It is never too late to start building an emergency fund, seek advice from a financial advisor, set a target, and keep to it by preauthorizing your savings transfers. You will be surprised how much money you can save in a short amount of time.
How to Better Prepare Financially if there is Another Pandemic?
There is no denying that the COVID pandemic has been a frightening experience, most are worried about their health and the well-being of friends and family. The economy throughout the pandemic has also been frightening to observe. The only thing people were certain of is that we were headed into uncertain financial times. The advice from many in the financial industry was to not panic and to continue to follow the plan you had in place prior to the pandemic. After all, investing is a long-term game, and trying to time the market hardly never works.
As most Canadian provinces begin to reopen, people are hopeful that life will begin to get back to normal. However, it is tough to ignore the financial impact the pandemic has brought with it. You may have lost your job or faced reduced income, if you are a business owner you probably had a decrease in revenue and had to make some hard decisions about your business and your spending. All of this took many by surprise, and many were not financially prepared. Leading to the question, how can you better prepare in case another pandemic hits?
Have an Emergency Fund
At times of financial uncertainty, cash is king, and ensuring you have enough cash on hand to cover basic living expenses for 3-6 months is a good place to start. In the case of a pandemic, you cannot really be sure how long your income will be stalled for. Having an emergency fund to help you cover your family’s day to day expenses is crucial in helping you remain mentally healthy during these unforeseen times. Worrying about your family’s health and safety as well as finances can take a toll on anyone, and can lead to fractures in the family unit as stress levels will be extremely elevated. Having this emergency fund does not mean you will not be worried about finances, it will however relieve some of the anxiety associated with the financial uncertainty. Building these emergency savings is not an easy process, and most of us don’t have this kind of money available to just put aside. Setting up a monthly transfer from your daily banking account to an independent emergency account can help you save over time.
Build a Budget
By keeping track of your average monthly spending, you will easily be able to review your expenditures and eliminate any non-essential spending. Having the ability to reduce spending early into a pandemic will help stretch your savings further, and give you more financial security. There are free budgeting applications out there that will help you keep track of your expenses if you are not into learning new software you can always use a spreadsheet or even a pen and paper to keep track of your spending. It’s a good idea to cross-reference what you have recorded versus what is shown in your bank and credit card statements monthly to ensure your records are accurate.
Diversify Your Investments
Ensuring your investments are spread across different assets will help manage your risk during any unexpected downturn. Partnering with an experienced financial advisor will help give you the inside track on where to place your investments, they will also be there to look for any early signs of volatility. Over time a diversified portfolio should yield a higher return while providing lower risk than any individual holding. I said it before and I will say it again, investing is a long-term game, and having someone there to help you achieve your goals is undeniably a benefit.
There is no sure-fire way to completely protect yourself from an unforeseen financial downturn like the COVID-19 pandemic, but you can be financially prepared to navigate the next pandemic by making a few minor adjustments and building a few positive habits.
COVID-19 Support For Small Businesses
If you are a small business owner, chances are that it is not business as usual for you and your team. The COVID-19 pandemic has forced many businesses to take a close look at their operation. If your business has been deemed an essential service by your province, you had to look at how you continue to operate while maintaining a safe environment for your staff and customers. If your business was not on the list of essential businesses but was still able to operate at a distance, telework and video meetings has become your new norm. For those businesses in industries that were required to temporarily close without a way to continue to work at a distance, you are probably waiting anxiously to hear about how and when your province will reopen and trying to plan for what your new norm will look like.
Both the Provincial and Federal governments have developed programs to help small business owners through this unprecedented time. Not all businesses will be approved for all programs, but if you have experienced a significant reduction in revenues, you may qualify for support for your business with the below programs.
TEMPORARY WAGE SUBSIDY
Eligible employers will receive a three-month temporary 10% wage subsidy. This will be in the form of a reduction in the total amount of payroll deductions you are required forward to the CRA. Eligible businesses must possess a business number and a payroll account with the CRA as of March 18, 2020 and must have been paying salaries, wages, bonuses, commissions to qualifying personnel.
Key Details:
Dates: March 18, 2020 to June 19, 2020
Subsidy: 10% of the remunerations paid during the eligible period
Allowances: Maximum of $1,375 for each eligible employee. Maximum subsidy of $25,000 per employer
Application Process: No application is required; however, each employer is responsible for calculating their own permissible subsidy. The amount of the subsidy is subtracted from the payroll remittance that you send to the CRA monthly.
CANADA EMERGENCY WAGE SUBSIDY (CEWS)
The CEWS was created for Canadians to retain their current employment by providing employers that were facing serious reductions in gross revenues. The program is set to run for 12 weeks and the subsidy will cover up to 75% of employee’s wages during this time. Qualifying employers will also be eligible to receive a 100% refund for specific employer contributions to CPP, EI, QPP, and QPI for employees that are on leave with pay.
Key Details:
Dates: March 15, 2020 to June 6, 2020
Subsidy: 75% of an employee’s wages during the eligible period. Gross revenues must have dropped by a minimum 15% in March and 30% in April and May.
Allowances: Maximum of $847 per employee per week. If you are eligible for the Temporary 10% wage subsidy, the amount of your benefit from that program will be subtracted from the amount you are eligible under CEWS for the same period.
Application Process: The quickest way to apply is by using the CRA My Business Account. Take advantage of the calculator tool to determine your subsidy amount to simplify the application process. We also suggest setting up direct deposit with your payroll account to get access to the subsidy quicker.
CANADIAN EMERGENCY BUSINESS ACCOUNT (CEBA)
This interest-free loan is intended to assist small businesses and not-for-profits cover their daily operating expenses during the time of reduced revenues. To qualify for the up to $40,000 loan, you must have paid between $20,000 and $1,500,000 in payroll for 2019.
Key Details:
Dates: Application process is now open, if the balance of the loan is repaid by December 31, 2022, 25% of your loan will be forgiven.
Allowances: Up to $40,000 loan
Application Process: Applications are submitted through the banking institution associated with your main business account.
CANADIAN EMERGENCY COMMERCIAL RENT ASSISTANCE (CECRA)
The CECRA has not been implemented yet, but the federal and provincial governments are collaborating to provide commercial rent relief to those businesses hardest hit by the COVID-19 crisis. The program will provide landlords with qualifying commercial properties forgivable loans that will cover 50% of the rent for a 3 month period, if the landlord agrees to reduce the rent by 25% during this period, effectively leaving the eligible small business owner to cover 25% of their rent for April, May, and June.
Key Details:
Dates: Expected to be operational by mid- May and apply to April, May, and June rent.
Allowances: To qualify, a tenant you must be paying less than $50,000 in rent per month, and have experienced a minimum 70% drop in pre-COVID revenues.
Application Process: Full details are not available yet, but it will be the landlord’s responsibility to apply for the CECRA in support of their tenants.
The above highlighted programs are just a few of the available programs developed by the Federal and Provincial governments to support small businesses. For a full list of available programs visit Canada’s COVID-19 Economic Response Plan. Whether you qualify for any of the above programs or not, we suggest you consult with your accountant and financial advisor to better understand your expenses, available cash and to build a financial plan that will assist you as you navigate this challenging time.
Get Ready, Get Set for Tax Time
Many people feel overwhelmed at tax time. If your clients do their own taxes and are confused or don’t know where to start, here’s a quick primer to help them file their personal tax return. Hand it out at your next meeting, or fire it off in an email — it’s a great way to remind your clients you’re here to support their financial well-being.
Tax Time Crib Notes
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- The deadline for filing a tax return is just around the corner: June 1 for personal and June 15 for the self-employed.
- Submit your return on time. If you owe taxes, you’ll pay a late-filing penalty of 5% of the tax owing plus 1% for each month you’re overdue, up to 12 months. You’ll also pay interest on the amount owing, plus on the late-filing penalty, starting May 1. Interest is compounded annually. If you miss more than one year, you’ll pay even more.
- T4 and T5 slips are supposed to be mailed by February 28. Collect all your slips before you start and keep everything in one place. (This will also prepare you in case the Canada Revenue Agency asks you to provide any slips or receipts.) Follow up with financial institutions and other issuers if you believe something is missing.
- If you’re married or living common-law, consult with each other before you file. If you’re working, for example, make sure that the one with the higher income claims certain credits — and make sure you don’t both claim the same thing. If you’re retired and there’s a large difference in income, you could jointly elect to split pension income.
- Check last year’s Notice of Assessment for important information such as RRSP contribution limits and repayments to the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP).
- Gather charitable receipts. You’ll receive a federal tax credit of 15% on the first $200 of donations, and 29% of the remainder. (There’s also a smaller provincial credit.) Consider pooling receipts with a spouse (letting the higher income-earner claim), or carry forward up to five years, if that gets you a higher tax credit. If you’re a first-time donor you may be able to get an additional 25% on the first $1,000 of donations.
- Collect all medical expenses for yourself, your spouse or common-law partner and minor children. You’ll get a tax credit for amounts over 3% of your net income or $2,397, whichever is less. You can make the claim for any 12-month period that ends in the 2019 tax year. (If you’re also claiming for a dependent, you need to use the same 12-month period.) Check which expenses you can claim before you submit.
- Claim RRSP contributions. Deposits made in January or February of this year can be claimed now or carried forward to next year. Check last year’s Notice of Assessment to confirm how much you can claim without penalty.
- Be sure to claim all that you are eligible for if you are a full-time student or graduate of a recognized post-secondary institution, if you paid union dues or certain professional membership fee, if you bought a home last year if you care for an elderly parent or a family member with a disability.
- Check your return, tax-filing software or the CRA website for complete lists of what is claimable and what is not.
- If using tax filing software, be sure to check overall fields before filing, including auto-filled fields, to ensure all information is correct and up to date.
If you have any questions or your tax situation is more complex than most, don’t hesitate to reach out. At Awealth, we have a team of tax experts to help with complex situations.
Four Reasons to Stay Invested During the Coronavirus Volatility
These four charts may help you understand the current market volatility as a result of Covid-19 and what you should know as an investor. Remember that markets have seen downturns like this before and history shows dips are followed by recoveries.
A History of Epidemics and Global Equity Returns
History has shown that when pandemics happen, markets may see some economic downturn, but they also recover. This chart below shows how returns from global equities have been affected by 12 pandemics over the last 50 years. The conclusion: markets recovered and pandemics had little effect on the long-term return of stock markets.
MSCI World Net Total Return US$ Index
Source: Bloomberg, Fidelity International, February 2020.
Source: Bloomberg, Fidelity International, February 2020.
Don’t Miss Out on the Market’s Best Days
Since we can not time the market, it can be tempting to pull out your money from fear of potentially losing it all. What you don’t realize is that you put your portfolio at the potential risk of missing out on the market’s best day.
The chart below shows that a $10,000 investment can become $5,020 by missing out on 60 of the market’s best days.
Annualized returns in the S&P/TSX Composite Index
Source: Refinitiv. S&P/TSX Composite Index total returns from January 1, 1986, to December 31, 2019. Past performance is no guarantee of future results. It is not possible to invest directly in an index.
Time Reduces the Volatility of Returns
This chart shows a comparison of the highest and lowest returns for various investment time frames from December 1980 to December 2019. We see here that volatility has primarily been a short-term concern. Keeping at least part of our money invested in stock markets for longer than 5 years significantly reduces the chances of a negative return and increases the chances of substantial positive returns.
Sources: Refinitiv. Indexes used: Canadian equities, S&P/TSX Composite Index; U.S. equities, S&P 500 Index; global equities, MSCI World Index; Canadian bonds, FTSE Canada Universe Bond Index. Based on monthly total returns (CDN$), except S&P 500 Index. Past performance is no guarantee of future results. The index returns presented are calculated monthly total returns in CDN$ (includes reinvested dividends) from December 1980 to December 2019. The three-, five-, ten- and 20-year periods reflect annualized returns. It is not possible to invest directly in an index. Returns are in CDN$ and include reinvested dividends. As at December 31, 2019.
The Cycle to Success
Market volatility can cause lots of panic, especially one that is linked to a global tragedy like the coronavirus. Markets have been, are and always will be cyclical. Historically, markets that have gone down eventually recovered.
This chart is a simple way to look at how many investors feel during an economic downturn. When markets start to recover, those who stayed invested tend to feel relieved, because they may benefit from the market recovery.
What To Do Next?
Since you can’t time the market, the best thing to do is to talk to us about what is right for your portfolio. If you have concerns about the effect of the current downturn on your long-term plan that we have built together. Please give a financial advisor a call to discuss the best decisions to ensure that you live the life you have earned today and in the future.
We look forward to speaking with you soon.
Four Reasons to Stay Invested During the Coronavirus Volatility
These four charts may help you understand the current market volatility as a result of Covid-19 and what you should know as an investor. Remember that markets have seen downturns like this before and history shows dips are followed by recoveries.
A History of Epidemics and Global Equity Returns
History has shown that when pandemics happen, markets may see some economic downturn, but they also recover. This chart below shows how returns from global equities have been affected by 12 pandemics over the last 50 years. The conclusion: markets recovered and pandemics had little effect on the long-term return of stock markets.
MSCI World Net Total Return US$ Index
Source: Bloomberg, Fidelity International, February 2020.
Source: Bloomberg, Fidelity International, February 2020.
Don’t Miss Out on the Market’s Best Days
Since we can not time the market, it can be tempting to pull out your money from fear of potentially losing it all. What you don’t realize is that you put your portfolio at the potential risk of missing out on the market’s best day.
The chart below shows that a $10,000 investment can become $5,020 by missing out on 60 of the market’s best days.
Annualized returns in the S&P/TSX Composite Index
Source: Refinitiv. S&P/TSX Composite Index total returns from January 1, 1986, to December 31, 2019. Past performance is no guarantee of future results. It is not possible to invest directly in an index.
Time Reduces the Volatility of Returns
This chart shows a comparison of the highest and lowest returns for various investment time frames from December 1980 to December 2019. We see here that volatility has primarily been a short-term concern. Keeping at least part of our money invested in stock markets for longer than 5 years significantly reduces the chances of a negative return and increases the chances of substantial positive returns.
Sources: Refinitiv. Indexes used: Canadian equities, S&P/TSX Composite Index; U.S. equities, S&P 500 Index; global equities, MSCI World Index; Canadian bonds, FTSE Canada Universe Bond Index. Based on monthly total returns (CDN$), except S&P 500 Index. Past performance is no guarantee of future results. The index returns presented are calculated monthly total returns in CDN$ (includes reinvested dividends) from December 1980 to December 2019. The three-, five-, ten- and 20-year periods reflect annualized returns. It is not possible to invest directly in an index. Returns are in CDN$ and include reinvested dividends. As at December 31, 2019.
The Cycle to Success
Market volatility can cause lots of panic, especially one that is linked to a global tragedy like the coronavirus. Markets have been, are and always will be cyclical. Historically, markets that have gone down eventually recovered.
This chart is a simple way to look at how many investors feel during an economic downturn. When markets start to recover, those who stayed invested tend to feel relieved, because they may benefit from the market recovery.
What To Do Next?
Since you can’t time the market, the best thing to do is to talk to us about what is right for your portfolio. If you have concerns about the effect of the current downturn on your long-term plan that we have built together. Please give a financial advisor a call to discuss the best decisions to ensure that you live the life you have earned today and in the future.
We look forward to speaking with you soon.
What is the RRSP Homebuyer’s Plan?
Saving is a lifestyle habit that helps with the realization of milestones, like buying a new home. The Registered Retirement Savings Plan (RRSP) in Canada allows you to have an organized savings system with reduced tax, and comfortable deductions based on your personal interests. This plan can then be channeled towards different things like health, education, and in this case, housing.
RRSP has several programs that allow individuals to withdraw from their RRSP accounts to fund major expenditures like a new car, tuition or their first home. For new homeowners, the RRSP program has the following features.
Total deductible amount
Depending on how long you have been operating your RRSP account, you should know the age of maturity for funds that are accessible/ can be withdrawn. Usually, it must have been up to 90days of saving that specific amount before you can request to withdraw it. For the homebuyer plan, you can withdraw $35, 000 (Thirty-five thousand dollars) to fund your home purchase, while as a couple, you and your partner can withdraw a total of $70, 000 (Seventy thousand dollars) as full- or part- capital for your new home.
Verifiable agreement for home/land purchase
While processing the funds from your Registered Retirement Savings Plan account to deposit is an important part of the procedure, it is also important that you get a signed agreement before you can buy or build a home. The agreement must also indicate that the home you are buying/building meets the required standards. This validates you as befitting of the benefits of the homebuyers’ RRSP program.
No tax disadvantage
One of the best advantages of the RRSP is that there are no additional disadvantages when it comes to tax –as long as you remain on track with the repayment, and pay up within fifteen years. The best way to ensure this is by being careful not to use the funds from your RRSP as full-capital unless you have the earning power to pay back within the stipulated timeframe.
Fixed repayment schedule
To help you make your repayment stress free, you can set up a weekly, monthly or bi-monthly savings plan that will be your fixed schedule for paying back the withdrawn amount within the stipulated time. The payment schedule also helps you know your deficit so you can always plan your finances rightly.
Knowing the pros of using RRSP to fund your new home is great, but you should carefully think it through before getting started. How secured is your income? Will you be able to maintain the repayment? Is it worth losing all possible future benefits?
If you are certain of your choice then no need for further delay, contact your RRSP account manager today.
5 New Year's Resolution That Will Save You Money
The New Year is well underway and we are nearing the end of the first month. By now, several New Year’s resolutions have been forgotten, postponed or, if the individual is really keen, in the works toward completion. Most New Year’s resolutions are focused on generic things like losing weight, eating healthier and becoming more adventurous. While these are all good in their lanes, financial prudence should also be emphasized.
You can channel your energy for the New Year into resolutions that will help you save money. Saving is a lifestyle which, like most habits, can only be developed one step at a time. You can choose to start small, or invest a whopping amount, but whichever way you choose to explore, make it your New Year’s resolution to save money. To get you started, here are five New Year’s resolutions that will actually help you save money.
Become debt-free
One of the reasons why people struggle to save is the fact that they are constantly paying off debts. As a result, any income they get goes towards paying a debt or the other. Make it your New Year’s resolution to avoid debts as much as you can, and pay off all your debts as fast as you can. Otherwise, you’ll keep earning to pay, not to have.
Generate an extra source of income
The importance of having an additional source of income cannot be overemphasized. Human wants are unlimited, and as such, it is important to generate enough income to settle the most pressing wants. You can dip into a fast-moving business or start-up something new, just to earn a little extra on the side. That way, by the time your main income arrives, you won’t be restricted to that bracket of revenue.
Invest in your retirement
There is no such thing as ‘too young to save for retirement’. In fact, the earlier you start saving, the better your retirement plan. You can start a government-authorized Registered Retirement Savings Plan (RRSP) and put aside a portion of your monthly earnings, without paying tax, towards your retirement.
Build a budget
This year, live on a budget that allows you to have the basic needs and just a little extra. No need for extravagances. Build a budget to guide your lifestyle.
Start a rainy day savings
Save towards eventualities. It will ensure that you are not caught unprepared for any happenstance and give you a sense of financial security and confidence.
Don’t be scared by your savings target, just take it in little bits and with some discipline, you’ll definitely achieve your goal before the year ends.