No matter how much income, bills, or debts you have, everybody could improve on their financial health in one way or another. The truth is that right now, a third of Canadians say they are struggling financially and may never fully recover from the pandemic.
Whether or not you’re in that group, you can still benefit from some better financial hygiene. Luckily for you, there are plenty of easy tricks you can use for that! Let’s talk about some simple ways to improve your financial health!
Financial Health Tips: Increase Your Income
This sounds totally obvious, we know. However, if you want more money in your pocket and to overall improve your financial well-being, then the best way to do this is to increase your income.
One of the best ways to increase your income is to start a side hustle. This is great because you can do it in your free time, and it can be anything you want! What do you enjoy doing?
Do you like making candles? Try selling some on eBay! Do you like driving? Try Uber or Lyft. Do you like hiking? See if you can get a part-time job leading hiking trips. Your possibilities are endless.
Now, if you’re working 70 hours a week, you can’t do this. If that’s the case, ask your boss for a raise. Regardless of how much you work, or even if you do have a side hustle, growing your primary source of income is an excellent way to increase your income.
The other best way to have more money in your pocket, especially if you combine it with an increase in income, you can find plenty of ways to save money.
Look for reductions on bills or taxes that you pay, eat at home more, cancel those subscriptions that you never use. If you eat out every day and it costs you $10 each time, that’s $3,650 a year that you could be putting toward retirement, or paying off your mortgage. There are plenty of other easily overlooked expenses that you could probably completely get rid of!
Measure Your Finances
You can’t manage your finances if you don’t know what you’re managing. Do you use one card for everything? Check down the list and see where you’re spending the most money.
You might realize that a $5 coffee every morning is costing you more than your car insurance. You might realize that your current job just isn’t cutting it. You might even be doing better than you thought! The only way to know is to look.
Pay Down Your Debt
High-interest debts like credit cards or payday loans need to be taken down right away. If you owe $10,000 on a credit card and you’re making the minimum payments every month, you could be facing an additional charge of over $2,500 in just one year. Payday loans are a lot worse. This cycle needs to stop.
If you are able to increase your income or reduce expenses, paying off your credit cards or short-term loans should be a top priority. Any other loans can wait.
Once that’s paid off, do your best to avoid these kinds of debts in the future. If you still want to use your cards to build credit, maybe save it for charging your Netflix and other subscriptions onto your card and pay them off in full every month! You’ll earn points over time, build credit, and not have to worry about accumulating much debt.
If your high-interest loans are taken care of, then you do want to focus on long-term debts like student loans or mortgages. These typically have low-interest rates, but you don’t want to be paying them out of your retirement account. If you have a 30-year mortgage, adding a hundred or more every month to your normal payment could easily clear you of your debt a lot earlier! That could mean early retirement!
There are times where taking out a loan makes sense, so if you’re making the right financial choices with it, don’t worry about the added debt.
Set goals, and stick to them. Write them down and keep them visible if you have trouble staying on track. You should have savings goals, retirement goals, debt-paying goals, and others.
If you’re looking to save for a down payment on a house, or if you want to pay for your children’s college education, then great! Have a timeframe in mind, know how much you need to save every week or every month to get there, and get started!
Some people prefer to have different savings types. Maybe you have an investment account, a normal savings account, a jar for emergencies, and a drawer for a vacation fund. Maybe you prefer to keep it all in one place. No matter what, learn how to save money in your situation, set goals, and keep up with them!
Arm Yourself With Knowledge
Read personal finance books, read finance blogs, listen to podcasts, whatever it is you prefer. If you’re reading this article, that’s a great start, so keep it up!
The more you know about personal finance, the easier it will be. Knowing which moves are risky, which are safe, and being able to make financially healthy choices on a consistent basis will definitely help you the most. If you really get into it, you’ll develop a voice in the back of your head questioning you later on when you want to make some impulse purchase!
Go On A Spending Break
Sometimes what we need is a quick break from spending to see just how much we actually do it. If you’re the type that pulls out your card instinctively when you leave your house, then this is for you.
If you don’t eat for 24 hours, your next meal will be more enjoyable, right? Well, if you do your absolute best to avoid any and all unnecessary expenses, you’ll enjoy it the next time you buy something. However, it will give you the reminder that you don’t need it.
If you go a whole week or a whole month without buying anything unnecessary, then you’ll learn that life still goes on without spending money. After your break, do some reflecting. What were the biggest challenges for you? What did you not find yourself missing at all?
Take a look at your expenses prior to that. Go through receipts or your bank statement and take a look at what you were buying before the break, then reflect on what you were able to go without.
Now, we’re not saying you should throw your life savings into penny stocks, but if you can manage to save up some money, making smart investments can really make a big difference.
The options are pretty endless here, too. If you’re timid about the stock market, you can buy government bonds that appreciate slowly over time.
You can also buy real estate. It’s a relatively safe investment with a long-term, dividend-style reward. You don’t even need enough for a down payment. You can always invest in a real estate investment trust (REIT). You’ll receive dividends every year, quarter, or month depending on the particular REIT.
And then, there are stocks! While investing in startups is very risky, and the market as a whole poses some risks, there are some pretty safe stocks out there where your money can grow slowly, but surely. Do you see Apple or Amazon going bankrupt any time soon?
We mentioned retirement briefly, but we really need to stress the importance of it. What’s the point of talking about your financial future if we’re not talking about the biggest part of it?
If you retire at 65, you could be living to 120 for all you know. Are you financially prepared for that? If you have a pension, you’re ahead of the game. However, is it going to be enough to last you forever? What happens if you lose that pension?
If you haven’t started saving for retirement, or if you’re only doing the bare minimum, the time to start increasing payments is now. The last thing you want is to reach retirement age and find out that it’s not in the cards for you. The sooner you start, the better.
Slow and steady wins the race every time when it comes to financial health. Making moves in larger, infrequent bursts just doesn’t cut it. Take small steps, arm yourself with knowledge, and be consistent with your financial habits! Remember, it’s a marathon. Not a sprint.
Keep up with our latest financial tips, and be sure to find out why you need an emergency fund!