Is 2014 Your Year of Financial Fitness?
It’s that time of year again, where we sit, fresh-faced at the dawn of a new year- full of possibility. Exciting? Yes. Daunting? Also yes. No one said change was easy.
Do your New Year’s resolutions involve becoming financially fit? Like all change, success takes planning, commitment and patience. Here are some tips on how to get your financial house in order for 2014.
Look at the Whole Picture
In order to ensure that you are exacting the change most effectively, take a look at your whole financial picture.
While desiring to pay off a single credit card balance is a great idea, there will be more impact if you look at a single debt (or asset) in relation to the whole picture. Accuracy is an important ingredient in financial success. Lay out all of your debts, assets and accounts.
Clearly State a Goal
It’s not enough to wish to become financially healthy- which is a vague concept, really. What you need to do is to define what financial health will mean for you (i.e. erasing credit card debt, saving up for a big purchase, buying a home etc. etc.) and set that as your goal.
And take it a step further. Write it down. Write it down again. And again- and post it all over your home/car/office so that you goal is always visually and mentally prominent.
Make sure in your goal setting to include short, medium and long-term goals as well, which will help you stay motivated over the longer term as well as act as a means of measurement along the way.
Become Financially Literate
Knowledge is power, particularly when it comes to money. If you don’t know an RRSP from a GIC, or the difference between a term and an amortization, now would be a great time to become savvy in some key financial concepts.
No one is saying that you need to become a financial expert, but knowing some of the basics surrounding investments and borrowing will only increase your ability to reach your goals.
Recognize the Role of Time
Most major (and positive) change does not take place overnight. It is a slow, sustained process which had to be adopted and adapted to over time.
For both debts and assets, time will play a key role in delivering you towards success. For debts, realize that erasing what you owe can take time- and perseverance- which is where long-term commitment comes in.
For investments and savings, the key is to start small and to let it grow over time. Even if you think that it isn’t worth it to sock away a small amount of each paycheque, it is. It really is.
Not only are you accumulating savings, you are making behavioural changes towards financial fitness.
Ditch the Plastic
It is hard in our “buy-now-pay-later” society that thrives on instant gratification to simply-wait.
Adopt a cash-only policy, which will reduce your risk of overspending, and will make you more accountable to your budget. This is a great way to streamline your financial plans, to get you most quickly towards your desired goal.