10 good habits for a healthy wallet

10 good habits for a healthy wallet

How can you improve your financial situation? Implement these 10 tips to have a healthy wallet.

1. Make a budget

Making a budgetis the first step on the road to having a healthy wallet.

Take the time you need to prepare one filled with numbers that match reality. The more realistic your budget, the easier it will be to stick to it and come up with a plan if your expenses are higher than your income.

2. Pay off your debts on time

Once you start spiralling into debt, it becomes harder and harder to find a way out.

The latest statistics reveal that Canadian household debt is 165.4% of disposable income, an incredible increase compared to 66% in 1980. This means that households owe $1.65 for every dollar earned after taxes.

So pay off your debts before their due date, starting with those that have the highest interest rate, such as your credit cards.

Do not overlook your mortgage payment either. The more you shorten the amortization period, the faster you will be free of mortgage payments.

3. Establish an emergency fund

Nobody is immune to an unexpected financial burden, such as emergency home repairs or job loss.

There is nothing better than an emergency fund to help you sleep like a baby.

It is estimated that we need to save between 3-6 months of net salary to be able to handle the unexpected and, above all, avoid going into debt.

4. Plan for your retirement

Are you more like the grasshopper than an ant? Now is the time to remedy that situation and plan for your retirement.

The sooner you start to plan, the more compound interest will snowball and provide you with a larger nest egg when it comes time to retire.

One thing is certain, all the experts agree that an Old Age Security pension is not enough to guarantee a decent retirement and maintain your standard of living.

5. Automatic saving

It is a better idea to save small amounts periodically than do so once a year.

Simply schedule pre-authorized debits from your bank account and watch compound interest work its magic. Returns on your investment are actually reinvested throughout the year, which may not necessarily happen if you invest only once a year.

6. Create a financial plan

Decisions you make about managing your portfolio reflect the goals you set for yourself. Your actions will appear to lack coherence if you set vague and ambiguous goals.

Realistically and conservatively define your financial goals. A strategy can often be built around your pay periods. For example, contribute to an RRSP or TFSA every time a paycheque is deposited into your bank account.

7. Control your impulsivity

Showing some discipline requires a lot more effort than it takes to whip out a card on a wild spending spree.

Keep a cool head and resist the urge to be the last of the big-time spenders.

Don’t fall into the impulse buy trap. Wait a few days. If you still really need it, go ahead and buy it.

8. Insurance

You don’t have to watch your plans or savings swirl down the drain following an illness, accident or premature death.

Safeguard your investments with a comprehensive and balanced protection plan:

Also remember to update your insurance contracts if ever your situation changes, such as if you get married or separated.

9. Plan your estate

Do not keep those closest to you in the dark about your last wishes.

Estate planning ensures you will never leave loved ones in the lurch and can keep looking out for them even after your passing.

10. Maintain a good credit score

A credit rating is kind of like a reputation. The better it is, the easier it will be to obtain a loan when you need it.

There are several ways to improve your credit rating.

Your advisor can help with a financial plan

Do you want to improve your financial situation? Have a frank discussion with your financial advisor. They can offer sound advice and help you develop a financial plan based on your needs and goals.