You follow every recommendation you read, you plan, you analyze. Excel is your playground. Congratulations! Being a saver is great, as long as it doesn't stop you from enjoying life now.
Planning for the future gives you the freedom to live life to the fullest right now. You're already disciplined when it comes to your money, and here are some tips to help you be even smarter about your finances.
It's in your interest
If you have any debt, compare interest rates. Decide which one to pay off first, and pay it off faster--for example, a credit card (higher rate) compared to a student loan (lower rate) or a car loan.
If your debt is under control, and depending on your saving goals, take advantage of an RRSP, TFSA or RESP. You'll enjoy the tax advantages, and the earlier you start contributing, the faster you'll get compound interest working for you.
The saver's financial cushion
As a saver, you think long term. At the same time, think about your financial cushion. The golden rule is to keep in your chequing account an emergency fund equivalent to 3 months' salary. In the event of accident, illness or an unexpected home-related payment, it's better to dip into these savings than to move back home with your parents.
Insurance: burden or blessing?
It's normal to feel strange about spending money to protect yourself from something that you hope will never happen. But the worst scenario is not having insurance when you really need it.
Here's some food for thought:
- If you're self-employed, it's in your best interest to take out disability insurance
- With certain essentials, like auto and home insurance, you can get products suited to your particular needs
- Young parents should have their coverage needs evaluated and consider life insurance
Make your wishes known!
Do you work hard and make a point of saving but haven't written a will? Why wait to let your wishes be known? A will puts your affairs in order and your mind at ease. While you're at it, why not take the opportunity to draw up a power of attorney (also known as a "protection mandate" in Quebec), appointing the person who will act on your behalf in case of incapacity. Your goal in the next few weeks? Call a notary (or an attorney if you live in Ontario).
You don't need an advanced degree
You don't need to get a Ph.D. from Harvard or read the work of a Nobel prize-winning economist to develop your saver side. All you have to do is make personal finance a part of your regular routine: read certain magazines or the money and business sections of the newspaper, watch TV shows or listen to radio features to expand your knowledge.
Employee benefits and employer contributions
Another tip, if it applies: take the time to understand the employee benefits and employer contributions of the organization you work for, to make sure you have effective strategies. At the same time, you might realize that you're paying double for certain things, like life insurance. Human Resources can provide you with more information.
Put the pieces of the puzzle together!
If your finances are a puzzle and you don't know where to start, whether you want to spend a little less or save a bit more, consulting an advisor is a smart move. It's kind of like having a GPS on your phone: with just one click, you'll arrive at your destination sooner.
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