Steer your finances through thick and thin

Money management is about more than just making ends meet.

These days, a dollar doesn’t go quite as far as it used to. Prices for a lot of things are higher than they were even just a short time ago, and for many people, necessities are tougher to afford.

Even with a healthy salary and a strong investment portfolio, decades-high inflation and rising interest rates may be putting a tighter squeeze on your personal finances. But as the saying goes, “Tough times call for tough measures” – and those measures could include polishing up your money management skills. Consider these tips for becoming thriftier and more focused with your finances.

Park your spending, or at least slow it down

If you want to keep more of your money, the answer is simply to spend less. While that might be easier said than done, there are ways to cut back that can effectively cause little disruption to your savings. Paying for essentials such as food, home energy, transportation and medical treatments should be a priority, while extras such as vacations, new cars and gadgets generally fall beneath the must-have threshold. Remember, any opportunity to spend money is also an opportunity to save.

Tackle debt

Carrying a lot of debt can feel like swimming against a strong current. High-interest debts, like those linked to credit cards, are the worst. So, to gain some ground, try your best to avoid missing any payments on the money you owe. Even paying the minimum amount required is progress and will help protect your credit score, which can make a big difference to qualifying for future loans and mortgages if and when the need arises.

Another popular debt-relief strategy is to combine all your debts into a single bank account or line of credit so every payment goes towards reducing the total, instead of trying to calculate which debt to pay for the most impact.

To tackle more serious cases, debt counselling is a viable, normal course of action. Professionals can assist you with the best strategies, and they can often be accessed via employee and family assistance programs available through your workplace benefits or rewards plan.

Get going on goals

Whether they’re short-, medium- or long-term, make a list of financial goals. Most goals will depend on your ability to make disciplined contributions, as most investments typically gain value the longer you hold them. But don’t forget to pay yourself for your efforts. Enjoying your life with the aid of sensible money management is perhaps a goal that everyone should strive for.

Don’t budge on your budget

Creating, and sticking to, a personal budget is a constructive way to keep track of your money over a set period of time. It can help you see where cutting back and redirecting some funds could make a healthy difference to your savings. If detailed enough, a budget will also show how impulsive purchases might be costing you.

Lots of handy budgeting phone apps are available to choose from. They can record your income and expenditures, provide customized reports, set spending limits and help you focus on long-term savings targets with little effort. After you subtract what you absolutely must pay for from what you have, then you can be creative with the remaining money and get it working for you.

Dig into digital

Speaking of apps, taking advantage of online conveniences, such as automated bill payments, monitoring of credit card purchases and payments, and transferring high-interest balances to lower interest accounts can be surprisingly easy and effective. Using calendar reminders to notify you of payments due can also help avoid late fees and other penalties that can drain your money away.

Take some time to conduct a digital audit. You might discover that your partner or others in the household are paying for the same type of individual digital subscriptions and services that you are. Family and home-based plans can give you the same level of service for a fraction of the cost.

Work perks

Most workplaces offer their employees some type of benefits coverage and group retirement or pension plan as part of the job. The potential savings on health-related costs, such as dental, medical and prescription drug coverage, as well as on life insurance supplements and matching employee investment contribution plans, can be significant. While plans and programs differ and some may not cover everything you might want, group plans are a better alternative to paying directly for each service, especially considering there is no way to predict what circumstances may affect you from year to year. Having the opportunity to deposit a small percentage of your pay into a group retirement and/or stock ownership plan is one of the most cherished employee perks and worth taking full advantage of.

Axe some taxes

You may hear about tax-deferral strategies and wonder if any could apply to you. To some degree, the answer is probably yes. The objective is to take legal steps to pay as little tax as possible and keep more of your money. Learning a few tax basics (and how they may apply to you and your partner/spouse) could end up saving you money that you didn’t know was possible. The same goes for eligible claims, such as medical costs, moving expenses, child-care and tuition fees, donations to charity and even investment fees, which could benefit one of you depending on whoever is taxed at a higher rate. There’s also a variety of tax savings available to single individuals. Speaking to a tax specialist or accountant can give you some helpful insights on ways to reduce the amount of taxes you pay each year.

Retirement on the (distant) horizon

Usually, the closer people get to retirement, the more they look forward to it. Having a substantial retirement fund in waiting makes it even more exciting. So, why not make all that hard work bear fruit by starting to prepare for retirement well in advance? While Canadians can anticipate receiving some government sources of income, such as Canada Pension Plan and Old Age Security payments, when that time arrives, they probably won’t be enough to provide the retirement lifestyle that you desire. The best time to start saving for retirement is now, and you should continue through every one of your working years. A variety of retirement income vehicles such as an RRSP or TSFA can help you achieve one of life’s most important goals – a long, healthy retirement.

Embrace advice

A recent consumer study says that only 42 per cent of Canadians have a financial advisor and just 26 per cent have a written financial plan.[1] Most people wouldn’t attempt to fix their own car or computer or diagnose their own medical problems but prefer to rely on a professional. The same principle can apply to managing your money: you may not be aware of the most effective ways to invest, the right insurance for your situation or how to navigate your way through a challenging economy. Accessing professional advice can help you avoid a lot of the mental stress that comes with trying to do too much on your own. Advisors will work with you to understand your goals and develop a plan that pinpoints how to achieve them, all while building more confidence in your financial future.

Make it a habit to contact your advisor regularly to discuss your current circumstances as they relate to your goals, as well as to look at any new financial options or opportunities that may be a good fit.

If you would like to begin working with an advisor but are unsure what to think about before setting the process in motion or what to ask in that first meeting, try to prepare ahead of time to make the most out of taking this step. This Solutions to go podcast has more in-depth insights on the value of advice.

Take action

Regardless of how much money you have or how the economy is behaving, sticking to some firm financial management guidelines can pay off. Inflation easily eats into purchasing power, but taking action to put your savings to work in reliable investments can eventually reap rewards. You can control the funds that enable you not only to make ends meet, but to enjoy what you value most in life.

[1] Debt, financial anxiety, and economic recovery | Manulife Bank

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