Co-founder and CEO Money Coaches Canada
To say it’s been a tough last few years is a big understatement. We were finally starting to plan for a more normal summer and wham, we’re now facing the aftermaths of the COVID-19 crisis – sky-high gas prices, rising food and travel costs, and interest rates hikes that are wreaking havoc with the stock, bond and real estate market.
According to a recent LifeWorks’ Mental Health Index report, 46 per cent of Canadians are feeling an increased sensitivity to stress than they were prior to the COVID-19 pandemic, impacting their overall mental health.
With so much negative economic and financial news, it’s not surprising that financial stress levels are on the rise. While there’s no way of escaping a challenging economic cycle, it is a good time to go back to the basics and make sure you are as well-positioned as possible to ride the storm.
The 6 Keys to Money Success
Don’t spend more than you earn. Does that sound obvious and simple? It is simple. But you would be surprised how many people (maybe you?) don’t know how much income they bring in from all sources. If your money is blended with a spouse or partner your total income may be even more foggy. You may have a salary, commissions, bonuses, side-jobs, passive income streams, pensions, investment income, or rental properties. And if you aren’t clear about what you earn, chances are good you’re less clear about what you spend. Even those who have a good grasp on how much they earn are frequently less certain about where that income goes each month. Action: Switch-off financial autopilot and use the On Track Money Management System
Keep your lifestyle debt to a minimum (especially in a rising interest rate environment). This refers primarily to credit card and line of credit debt that creeps up month after month, year after year. We are a nation of debtors, but this doesn’t mean you have to be part of the craziness. Unexpected things come up in life and a credit card can certainly get you out of a jam (car repair, furnace failure) but don’t just let the debt sit there, pay it off as quickly as possible. If you like to shop with a credit card to earn points or cash back bonuses; be sure to spend within what you can payback before you are charged interest. Action: Don’t spend what you can’t pay in full by the end of the month. If that isn’t possible (because of an emergency expenditure), create a plan to pay it off and stick to the plan.
Create savings over time. Review your cash flow and make sure there’s some left over for emergencies (to avoid those credit card scenarios mentioned above) and future savings. This may take a lot of discipline and maybe even some sacrifice, but it’s absolutely essential if you want to retire someday or avoid a potential financial crisis from job loss, illness or another inevitable downturn in the economy. Action: Start right away. Get clarity on what you need to save and then make a realistic plan to get there. Don’t wait because you think the amount you can save right now is not substantial enough. Every. Dollar. Counts.
Make sure you understand the basics of investments. Do a little advance homework. There are many books that will teach you the basics of investing, and if a book seems daunting just do a google search, but make sure you only read articles from reputable sources. Action: A good place to start is the Money Coaches Canada Your Investment Check-Up. Afterwards, if you have questions or concerns about your investments, an On Your Side Investment Report Card™ will provide an evaluation of your investments, and a straightforward action plan to implement our recommendations.
Know when “enough is enough.” Do you know how much money you really need/want at this specific stage of your life (student, business owner, family person, retiree). How will you know you’ve reached this target? In a social media obsessed world we can lose sight of what is important to us and start comparing our choices to those of our friends and neighbours. Action: Turn off the noise of the internet and really think about what you value. There are no right or wrong answers, it’s your life. Once you know how much money you need, it’s time to crunch the numbers so you can make a plan to get you there.
Appreciate what you already have. It might sound trite, but there is a great sense of relief and freedom in acknowledging your past successes and appreciating what you already have. This is not only about the material goods you own, such as your home, investments and savings, but also about your education, job satisfaction, family and friends, talents and skills, quality of life and so on. Don’t believe you’ll suddenly become happy when you reach a certain wealth milestone. That sort of happy is fleeting. Once a level of financial success becomes your new normal, it won’t be enough to make you happy anymore. Just look at all the unhappy wealthy people in this world. Action: Understand that happiness is a mindset that you can adopt daily by choosing to focus on growth and gratitude. Happiness comes from a sense of purpose and connection, not from things.
- Don’t spend more than you earn.
- Keep your lifestyle debt to a minimum.
- Create savings over time.
- Make sure you understand the basics of investments.
- Know when “enough is enough.”
- Appreciate what you already have.
Simple, but it does require planning and engagement. If you would like help making these six simple steps the foundation of a solid financial future, give a Money Coach a call.
Thanks for the words of wisdom Karin!
Karin; great article with some very practical advice!
To gain a financial success you need to save your money means do not spend extra amount that is not needed, you need to understand the basics of investments, etc.
Financial success is difficult to achieve, and you need the little things to be successful. These little tips here will help you achieve success, and we have to thank Karin for sharing these beautiful tips with us.