Make Type:

Larger Smaller Reset

2008 FINANCIAL RESOLUTIONS

By: Marc Scoten, CFP

If you’re like me and enjoyed the holidays a little too much, your New Year’s resolution probably has something to do with your waistline.  But what about our financial fitness? Here’s some tips on how to help you keep your finances in better shape in 2008:

1. Start your financial turnaround with a plan.  As with starting any self-improvement regimen you first have to know what needs exercising before you start.  A financial plan will identify what issues are most important to you, it will outline steps to address them, and it will ensure that the plan is implemented, monitored, and adjusted if necessary.

2. Increase your intake of high-quality advice.  There are many advisors to choose from in the marketplace.  So how do you decide on one?  A good place to start is to consider advisors who have gained their financial expertise through rigorous education and experience requirements. These are people who hold the CFP designation. You should also ensure that your advisor is someone who you are comfortable with, and who will take the time to understand your individual needs.

3. Schedule an appointment with your financial health expert annually.  Not only is your CFP professional qualified to evaluate your overall financial wellbeing and devise a plan to improve it, but they can also help you execute your plan and monitor your progress.

4. Substitute unhealthy financial habits such as contributing to your RRSP at the tax deadline each year with good practices such as making regular monthly RRSP contributions throughout the year.  This will ensure your RRSP dollars are put to work more quickly.
   
   
5. Don’t get discouraged by the short-term results of your financial exercise program, but instead look at the long-term payback on your financial health.  For example, a properly- allocated investment portfolio, which addresses your objectives, your risk tolerance, and your time horizon should, over the long-term, provide you with risk-adjusted returns that are consistent with your goals.
   
   
6. Cut down on “binge” investing.  Chasing returns from flavour-of-the day investments rather than allocating your money across a well planned, well-diversified portfolio can be hazardous to your long-term financial health.
   
   
7. Avoid the temptation to feast on easy credit terms – especially if you can’t afford to pay the bill.  Many credit card companies offer pre-approved limits and low introductory rates which increase significantly after a few months.  If you can’t clear off your credit card balance monthly, you could end up paying a lot more in interest charges than you bargained for.
   
   
8. Carry out your financial exercise regime with your partner.  A financial plan, which is not devised and adhered to by both partners, will have less chance of succeeding than a strategy that is mutually agreed upon.
   
   
9. Protect yourself while exercising your financial plan.  Make sure it is equipped to handle stumbles such as disability or even the death of a loved one.  Insurance plays an important role by making sure your plans are not derailed by a sudden loss of income.
   
   
10. Don’t procrastinate – as with any fitness program, the earlier you start addressing your financial health, the better off you will feel in the long run.