Understand the rules of saving to manage your money

Understand the rules of saving to manage your money

Living on a budget? The budget also includes the savings needed to achieve its goals. Saving early is a highly profitable strategy because every year, you usually make a little profit from the money you save. Because money savings usually generate interest. For example, if you save $ 10,000 at an annual interest rate of 2%, you will have $ 10,200 at the end of the year. $ 200 more without lifting a finger!

If we repeat the operation year after year, the amount that becomes fruitful becomes even more important, especially if we regularly save. So-called compound interest is a real snowball effect. The sooner you invest, the more you make. Also, it is much less demanding to save $ 20 a week for ten years than to try to money savings of $ 200 a week twenty years later. The most beneficial savings vehicles are certainly the TFSA and the RRSP.

Reduce and eliminate debts
Many Canadians are still living beyond their financial means. On average, they spent $ 1.67 for every dollar earned in 2016, according to Statistics Canada. Although a residence may be resold later (it is an asset), credit card, personal loan, and car loan debts must be repaid.

Also, do not wait until the debts crush you before taking the situation in hand. Eliminating them as soon as possible has a lasting impact on your future financial health since the longer you drag a debt, the more expensive it is in the end. It is possible to reduce one’s debts by cutting some non-essential expenses in one’s budget, by always paying the minimum and repaying the largest loans first.

Manage your money according to your profile
When you are a student
In school, you have to juggle classes, jobs, part-time work, tuition, and books that are sometimes very expensive. To avoid getting lost in the whirlwind of a young adult’s life, an adopted budget is a key. He will focus on his studies, without financial worries. Many students even choose to work only in the summer, as they plan their spending well throughout the year.

Also, you may have to buy a larger home to accommodate your family. A first home also requires medium-term planning.

When you are retired
The retreat is made for fun, but that’s no reason to lose sight of your finances. Retirement is often accompanied by a decline in income, so expenses must also follow.

The important thing is to respect its financial capacity, like Natalia Sandjian. “The role of a financial planner is also a daily advisor. I remember a 70-year-old retired client who called me directly from a car dealership to ask if she could afford to buy her dream convertible. I checked his file, and told him to run! ”

Of course, a well-planned retirement will be more enjoyable because it will not result in a significant decline in the standard of living. That’s why starting to money savings early is a winning strategy for all of life.

signs that your finances are doing poorly

1. There is a balance on the credit card at the end of the month
The credit card is a source of short-term credit that should be paid back monthly. Interest rates are too high to make another use.

2. We live from one pay to another
You must be able to cope with an unforeseen situation without going into debt because there will always be unforeseen events … and we have to foresee them!

3. We can not save
Money savings should be a budgeted habit in the same way as any current expense. We deserve, after all, that a portion of the hard-earned money goes towards our projects, not just the cost of living.

4. There is a gap between our priorities & the reality
Feeling overwhelmed by one’s financial situation, so that one is unable to invest in what one deems important, is undoubtedly a big red flag.
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