Life’s big events bring with them responsibilities and—you guessed it—expenses. That’s why it’s important to set priorities.
You don’t necessarily have to put your plans on ice, but a few tweaks go a long way to preventing those happy moments from turning into financial headaches. Here are the 3 most important things to remember for good financial planning.
Your budget is your friend
“You have to protect your financial health and reduce money-related stress at all costs,” says Angela Iermieri, a financial planner at Desjardins. “Make the most of one of your most precious allies: your budget.”
When you put your current spending and income down on paper and consider what you’re going to need, you’ll have a better grip on your finances and will be better able to spot potential pitfalls. “Regardless of your plans, your budget and financial means should always guide your decision-making,” says the financial planner.
If your budget gets thrown off due to a layoff or extended unemployment, your first step will be to take stock of your income (employment insurance benefits, the Canada Emergency Response Benefit, etc.) and your savings. Remember to include any financial assistance or relief you have access to. That money could make all the difference.
If you’re a new parent, find out what your income will be based on the benefits you’ll receive during your maternity or paternity leave. Make sure you account for the new expenses that come with your little cutie.
For major projects, whether a wedding, new home or renovation, set aside a little extra for cost overruns and unexpected expenses. That way you’ll be prepared for anything.
Check out our tips for adjusting your budget during a crisis - This link will open in a new window. for more ideas.
Saving, a good habit you don’t want to break now
It may seem counterintuitive, but periods of uncertainty like we’re living in now are a good time to reconsider your ability to save. Savings should remain a priority even when you’re strapped for cash.
It may seem like mission impossible, but there are a ton of little tricks you can work into your plan. “If you set up automatic transfers to savings, even if the amount is small, you’ll save without even thinking about it,” says Ms. Iermieri.
Schedule them at regular intervals, for example on payday. That way the money will go to savings before you get a chance to spend it. You’ll create a savings habit that’s easy to maintain when things return to normal, and gradually build up an emergency fund to preserve your quality of life if something unexpected happens.
Be smart about financing
Certain projects require financing. Yes, credit cards give you quick, easy access to cash, but you have to make sure you use them wisely, paying off the balance every month. If you can’t do that, you’re better off exploring other financing options with your advisor. Look for something with a low interest rate and fixed payments and term.
“Credit cards will always be a practical way to finance something over a short period of time. You should try to pay the full statement balance by the due date,” says the financial planner. “But if that’s not possible, at least make sure you pay more than the minimum due. Depending on your situation, a low interest rate card might be able to help you clear your balance sheet.”
Your advisor is always available to talk about your financing needs and help you find the right strategies for your life and your means.
Extra tips on ways to save
When buying a new property
- Keep an eye out for stores that specialize in overstock items. Their prices are often more affordable.
- Look for discounts on items and accessories for your home. Lots of brands offer discounts of up to 75% on certain items.
- Spread the word to family and friends about what you need. They may have something they want to give you.
Getting ready for a new baby
- Research the government funding and programs you’re eligible for.
- If you’re expecting multiples, check with retailers. Many offer discounts for twins and triplets.
- Talk to other parents you know. They’ll help you identify which items you can’t live without and any potential expenditures you need to plan for.
- Shop secondhand whenever possible. You’ll save more than you think!
We hope these tips will help you keep calm and march on to achieve your goals. One thing is sure: if there’s something to be learned from this health crisis, it’s that the time to start good financial habits is now so you’ll be better prepared for life’s ups and downs later.