New Years Resolutions

As we ring in the New Year today, millions of Canadians will make “New Year’s Resolutions” that will largely focus on their health.

The most common resolutions that occur year after year include eating better, quitting smoking, exercising and spending more time doing things that are important to you.

Far less common are resolutions focused on your financial health. It is well known that sound financial health leads to less stress and in turn, will greatly benefit your overall health and wellness.

In last week’s column, I talked about my “1% challenge” idea and suggested that it could be a New Year’s Resolution for you to take on. As a follow up, I wanted to provide a few more resolution ideas to consider:

Resolution #1 – Create a Budget. Most dieters know that the key to success is to monitor every calorie you eat. So why not use this same strategy by counting every penny you spend for at least two months.

There are countless tracking options out there including smartphone apps, free computer software or even a good old notepad and pen.

Once this data is compiled, you can create a realistic and accurate budget to work with and likely find several areas where you can cut out some unnecessary expenses.

Resolution #2 – Pay Down Debt. A simple first step in reaching this goal is to list every debt that you hold and what interest rates each debt carries.

From there, you can create a plan with money set aside from your budget to start paying this debt down strategically. Sort your list of debts from the highest interest rate down (taking any deductibility into account) and then make minimum payments only on every debt you hold except for the one at the top of the list.

When that first debt is paid off, move on to the second item in your list and so on.

Resolution #3 – Create an Emergency Plan. A proper financial plan will account for all types of unexpected events. An emergency fund with a couple of months living expenses should be built up and appropriate life, disability and critical illness insurance protection should be researched and obtained.

Start by asking yourself a few “what ifs”: What if you lost your job? What if your spouse or child became sick and forced you to lose work and incur extra medical expenses? What if the primary income earner of a couple were to pass away?

If you don’t have an answer to these questions, take the time to create a plan.

That’s it! Although I could have listed many more ideas, I’ve kept it to only three, so it will be a little less daunting.

The above list is by no means exhaustive but achieving these resolutions will provide a great foundation for a solid financial plan and a healthy 2019.

Happy New Year to you and your family and here’s to 2019 being the year that you achieve sound financial health!