Make Some Financial Resolutions for the New Year
Written by Jim Yih •
The New Year is a chance to make some resolutions. It is like starting over and doing things differently. Some resolutions involve relationships, personal interests or lifestyle choices. Many resolutions involve either health and fitness or financial fitness. While I am not qualified to help you tone your abs, I can give you some ideas for financial resolutions and tips to help you get financially fit.
1. Get rid of holiday debt
0Canadian and U.S. consumers have spent hundreds of billions of dollars on gifts this holiday season.
Debt hangovers from the holidays can be extremely painful. Not paying off your holiday debt can mean high interest payments or that your credit will be tied up while you pay down your debt.
If you’re in this situation, make sure you put together a plan to pay off the debt. Don’t be overly aggressive in your estimate — you need a workable plan.
· Be sure to pay more than the minimum on each card each month
· Put the most down on the card with the highest interest rate.
· Try to consolidate credit card debt using low interest credit cards or personal lines of credit.
· Curb your spending so your balances do not build up again.
· Destroy old credit cards with high interest rates.
· Once you get ahead, try not to have any balances for longer than 3 months.
Related article: 5 Ways to pay off your credit card debt
2. Create a retirement plan
People spend more time planning vacations than they do planning for their retirement. Statistics show that Canadians are just not doing a great job planning and preparing for retirement. Only 9% of all the RRSP room is being used.
With our aging population, there is going to be more pressure on government benefits for retirement. Demographics, increasing life expectancy, earlier retirement trends are all creating more pressure on Canadians to start planning for their retirement.
Related article: Understanding Government Benefits
If you are not sure how to go about this, see a financial advisor and ask questions like:
· How am I doing financially?
Before you make the call, be sure you have an idea of what you are spending on a monthly or annual basis. You’ll need an idea of when you plan to retire and you’ll want to be able to articulate some of your retirement visions and goals.
Related article: What is a retirement plan?
The bottom line is don’t wait. The sooner you start, the better!
3. Consider high interest bank accounts
Currently, there are many financial institutions that offer a newer way to bank. They pay you higher interest than your conventional bank accounts and they charge you less fees. Welcome to the world of high interest bank accounts.
Related article: How to increase rates in your bank account
The key to high interest banking is that earning money using your bank account can make significant differences. Anyone that keeps higher balances in their accounts should really consider these accounts.
One of the fears of high interest banking is the fear of change and doing things differently. In my mind, you do not have to replace your current bank account or banking strategy. The high interest bank account can complement your existing banking habits. I urge you to open up an account because there is generally no cost to open an account and no cost to close an account. ‘Test drive’ these accounts for free and see if you like the idea of higher interest and lower fees. I know it has made a huge difference to my personal banking success.