ÉducÉspargne offers you in this section a series of 20 simple and direct budgetary and financial tips that highlight our attitude towards savings and money.
1 – Start saving early.
Remember that building your savings is not a sprint, but a marathon. Each time you manage to save money, you can be proud of it and see your investments grow. Saving a little $20 a week will give you just over $1,000 at the end of the year.
2 – Be patient.
When you are evaluating which investment vehicle to put your savings in, you may well find certain rates of return rather “cushy” these days… You have to know your investor profile and make choices that are more or less risky depending on the case. When you plan to retire at age 35, you still have several years ahead of you to grow your assets.
3 – Beware of impulse purchases.
Buying opportunities abound in our consumer world. Nothing like an unconsidered purchase to destabilize your budget. Do you really need that home theater bundle that will land you in monthly payments of $100 a month for 2 years?
4 – Project yourself into the future.
You have all kinds of plans and your friends find that you always manage to carry them out. This is good news. You have learned to set goals and take concrete steps to achieve them step by step. This is also the case in financial projects. The rule of thumb is to review your goals regularly and adjust your plan as you go along, taking into account changes in your life.
5 – Plan, plan and plan.
Why? You should regularly review your financial situation. Want to buy your first home? Have you placed part of your savings in an RRSP that allows you to withdraw up to $25,000 tax-free from your registered retirement savings plans to buy or build a home? Even if your retirement is in 25 or 30 years, give yourself a first plan knowing that the situation will change over time. The guide to financial planning for retirement from EducSave is an excellent tool for taking action now.
6 – Think in terms of expenses…
From your gross income, your employer subtracts certain payroll deductions and taxes payable. But, when the time comes to buy a product or service that costs you $100, for example, remember the following: this $100 net (plus GST and QST) actually represents $20, $30 or $40 more depending on your tax rate and other payroll deductions. If you earn $15 an hour, you will have to work about 9 hours for this purchase (about 20% payroll deductions). That’s kind of why so many people get skillful doing all sorts of little jobs on their own. It is often said, in fact, that saving is equivalent to paying oneself.
7 – Good and bad debts…
You have to learn how to use credit wisely. Ideally, you should be debt-free, but few people can buy a house without getting a mortgage. Let’s call your mortgage debt good debt since your home is also a major real estate investment that will appreciate in value. However, purchases made with a consumer credit card should be paid upon receipt of your account. The interest rates for these cards are way too high. Common consumer purchases (furniture, electronics, etc.) do not increase in value.
8 – Make your budget…
And respect it! Take control of your personal finances. To achieve this, make your budget forecasts. You can track your income and expenses on a weekly or monthly basis. You choose. You can use the EducSavings calculation chart that allows you to determine fixed expenses and variable expenses and your savings, including retirement savings. You will quickly see where your consumption habits can be changed to achieve the projects that are important to you.
9 – Watch out for inflation!
When forecasting income or expenses, never forget the inflation factor. Inflation eats into your purchasing power. Planners factor this into their forecasts of future income.
10 – Live below your means!
Once your budget is done, you now have a good idea of your income and expenses. Even if it may seem simplistic, make sure that your expenses do not exceed your income from all sources. Getting rich is not living within your means, it’s living below your means. Adopt a lifestyle where you eliminate all superfluous expenses.
11 – Determine your investor profile!
Now that you’ve managed to save for investments, take the time to discover your investor profile. Are you ready to get your hands on stocks of large, dividend-paying Canadian companies or invest in fixed rate bonds? In general, return and risk go hand in hand. To find out your investor profile, you can consult the websites of financial institutions.
12 – Ask for advice!
Do you find that your savings and investment strategy does not seem to be working? Are you still in debt despite commendable efforts? It may be time to seek advice. Your financial institution can help you see things more clearly. For advice on different aspects of financial planning, a financial planner can help . For budgetary reasons, the Cooperative Home Economics Associations (ACEF) have offices in several regions of Quebec. See the 2013 Personal Finance Guide from the Protégez-vous collection.
13 – Ask questions!
Feel free to ask any questions that come to mind about your investments, your RRSPs and your personal finances. it is better to put everything on the table and give yourself a clear plan that will help you cultivate your growth.