Financial goals can be tough to attain, and even more so when the world is throwing extra challenges your way. Amid inflation, and news of a recession you may be re-evaluating your cost of living, discretionary expenses and future financial goals. Better Business Bureau (BBB) has put together a list of five financial resolutions to tackle first while you’re still motivated to make the most out of 2023.
“Holiday expenses may still be looming on your credit card bill, and amidst an unsettled economic market, having a stable financial footing is a necessity this year,” says Aaron Guillen, Media and Communications Specialist for BBB Serving Mainland BC.
Here are five resolutions to set your sights on for 2023:
Improve your credit score. Most lenders will not give out loans to people with bad credit or if you are lucky enough to find one that will, your interest rate will be quite high. If you have a credit of less than 660, you should really try to raise it, according to Equifax Canada. By paying your bills on time and in full, limiting how many new accounts you open, and utilizing a smaller percentage of your overall credit limit, you can slowly work your score up. This is especially important if you want to finance a car or even buy a home or condo.
Create a personal budget. Tracking your spending month to month is a strong way to identify where you can cut back. Write down all fixed expenses, like groceries, cell phone, and rent or mortgage. Then see how much money is left for flexible expenses, like clothing, happy hour, and entertainment costs. Many bank phone apps give you the chance to review your total spending by category each month, which is helpful when setting up a new budget. Many experts recommend using the 50/30/20 rule. Use 50% of your income for your needs, 30% for wants, and 20% to pay down debt or save.
Try out the budget planner built by the Financial Consumer Agency of Canada to start the year on a financially strong foot.
Build an emergency fund. Unexpected challenges are always around the corner, but it’s best to be financially prepared when they do arrive at your door, such as losing your job or getting into an accident. The general rule of thumb is saving the equivalent of three to six months of your regular expenses. By planning out your monthly expenses, you can figure out how much money you should be putting aside each month. Whether it’s $50, $20, or even $5 a week, the important thing is to stay consistent and start now. For example, $50 a week saved equals $2,600 in a year while $5 equals $260.
Determine and assess any debt you owe. Do you have student loans or unpaid credit card balances? Making a plan to pay off debt is all about getting organized first. Knowing who you owe, how much you owe, and how you will afford to pay off your loans should be first priority. If needed, book a meeting or call with a bank advisor or your lender to assess your options around how to pay off your debt, such as choosing a debt avalanche, debt snowball method, or a debt consolidation loan. With a debt avalanche, you approach the debt with the highest interest rate first. With the snowball method, you simply pay off your smallest debt first. Both situations will create momentum to pay off your next debt.
Look for the Sign of a Better Business by going to BBB.org and trusting an Accredited Business to get the job done right as your financial planner.
Create a will. Having a will isn’t just for seniors. If you don’t have one when you die, provincial laws can determine who takes ownership of your assets and the costs to administer your property will increase. Wills are strongly recommended for those who have children, a spouse, or valuable assets, such as a company or stocks. Although you can write your will yourself, it’s a good idea to get help from a lawyer to make sure your will is legally binding. If your will isn’t considered legal, it could create problems for your heirs. Having a will protects your family and your assets.
For more advice and tips to get started on new year’s resolutions, head to BBB.org/all/new-year-s-guide.
