Some Pointers on Personal Finance
Friday, April 24, 2015 by Michelle
My nieces are all independent young adults now. I created a quick "financial pointers" sheet for them of my (often hard won) lessons in life on finances.
Everyday Living
- Don’t let money run your life; money serves you, not the other way around.
- Live within your means. Except for a mortgage, don’t go into debt if you can help it.
- Ensure your credit card balances are paid off every month; pay automatically from your bank account and always be sure there’s enough to cover the payment.
- Pay attention every month to bank and credit card balances.
- Rock those points; use them to buy everything from fuel cards to appliances to RRSP contributions.
- For medium- to large-ticket items, learn to comparison shop/price check (including checking online reviews).
- When tempted to buy on impulse, ask yourself, “Will I love this in one year?”, then go have a coffee, take a walk or even better sleep on it. If it’s really worth it, go back.
- Never buy something from someone who says, “this deal is only available right now/ today.” Don’t do it. Ever. Walk out of the situation.
- Give to a registered charity on a monthly plan. The contributions help with taxes and it connects you to the community. Pick a cause or two you feel passionate about and establish a relationship with them.
- Be realistic and tailor it to you (e.g., weekly cash envelopes, smart phone app and/or monthly reconciliations).
- Don’t think of it as restrictive or feel guilty if you ‘cheat’ – it’s your money.
- When you go on vacation, create a budget. A lot of expenses can be figured out ahead of time. Look for savings coupons for tourist attractions.
- Start your Registered Retirement Savings Plan (RRSP) yesterday; think of it as “untouchable” until you retire.
- Build up to and save three months worth of living expenses in a savings account. It will take time to build.
- Save for ‘near future’ extras like vacations rather than going into debt. It adds to the anticipation and will help you from overspending.
- For all kinds of savings, do automatic deductions every week or month (and don’t take out an annual RRSP loan – contribute a little each month instead).
- If your company offers matching RRSPs, do it. It’s free money.
- Don’t be mortgage poor (e.g., the bank says you can afford $150K, look for a place in the $130K range).
- Pay your mortgage every week or every two weeks (not monthly or twice per month). It takes years off your payments.
- When you can, do an ongoing top up on your payment each month and/or make a lump-sum payment before the end of each year; it pays onto the principle and shrinks the length of time you have your mortgage.