November is Financial Literacy Month

Another year has gone by. Are you happy with your financial state? Are you getting ahead or are you falling behind?  Would you like to know how to improve it? If you are frustrated with your financial situation, this is a great month to make some changes because November is Financial Literacy Month.

Make a budget

There is a saying that a budget is “telling your money where to go instead of wondering where it went.” Start by listing your income. Income can come from various sources including your job, any side income you might be making, etc.

Next, list all your expenses including both fixed expenses and expenses. Start by listing your fixed expenses like rent or mortgage payments, utilities, taxes, transportation costs, etc. Next list your variable expenses like entertainment, subscriptions, debt payments, and savings.

Once your budget is complete, you will have a good idea of whether your income is sufficient to pay for your lifestyle. If it isn’t, you will either have to find a way to earn more income or look for places you can cut your spending – or a combination of both. If you are spending less than you make, consider putting more money into investments to save for your future. Know components of a strong financial plan.

Understanding Credit and Borrowing

Having good credit is crucial if you want to buy a home or finance a new car. To have good credit, however, you must establish a credit history. You can do this by getting a small amount of credit (such as on a credit card), using that credit card and then paying it off each month.

There are various credit options you can explore, but you should make sure whichever ones you choose are ones that suit your needs. You also need to make sure you have a plan to pay off any debt. Otherwise you could find yourself overwhelmed with debt payments and interest that is only going into someone else’s pocket.

Saving and Investing

Paying yourself first and putting that money into good investments is one of the top ways to create financial freedom. Make sure you are putting away a portion of your income each month into savings vehicles such as a TFSA or an RRSP. And if your employer offers a company pension plan, make sure that you join it as soon as you are eligible – especially if the employer gives matching contributions because that is free money!

Another good thing to do is create a ‘rainy-day’ fund. That way if you have an unexpected expense such as a car repair, you won’t have to rely on credit. Ideally, your rainy-day fund should have enough to pay for 3-6 months expenses.

Financial rights and responsibilities

Banks, insurance companies and lending institutions are available to help you with your debt and savings. If someone is treating you poorly, you should know your rights. Don’t let someone push you into anything you don’t understand.

Also make sure you educate yourself on what investment tools are available to you to help you reach your financial goals. Read good financial books and attend financial seminars. Would you like more tips and advice on reaching your financial goals? Contact MILIFE Insurance today to set up an appointment.