Now that the New Year has come and gone, it's time to start thinking about how you are going to improve yourself in 2017. Maybe you want to return to a regular gym habit or start eating healthier, but have you considered making a commitment to improving your finances first?
All good practices stem from a healthy financial situation, so it's important to have your money under control as a building block for a prosperous life. To start you off on the right track, here are RateHub.ca’s top strategies for improving your finances in 2017.
Create a budget
Sounds boring, right? But all personal finance experts agree that the first step to improving your finances is to create a budget. If you don’t already have one, there are many free templates to download online. To do it yourself, just list your income and subtract your monthly expenses, and whatever is left over at the end of the month is what you can use to reach your financial goals.
If you aren’t sure how much you are spending in various categories such as groceries, entertainment, or shopping, try tracking your expenses for three months. Tracking your expenses will give you a solid idea of what you spend so that you can put an accurate figure in your budget. Accuracy will lower the probability of blowing your budget, which may cause you to give up prematurely.
Reduce your expenses, increase your income
As I mentioned above, after you have your budget template filled out, you'll know how much you have left at the end of each month to reach your financial goals. If you want to take your finances to the next level, you need to explore ways to increase that portion of your budget.
There are two ways you can do this. First, reduce your expenses. Take a hard look at your budget and find areas to cut. Here are some ways to trim your budget:
- Find an apartment with cheaper rent
- Cut out cable
- Reduce eating out to once a month
- Ditch your weekly shopping trip
- Switch to no-fee banking
- Negotiate a lower car insurance rate
Once you've reduced your expenses as much as possible, you'll have more money left over to reach your financial goals. You can boost this amount even more by increasing your income. Here are some quick ways to increase your income:
- Work overtime
- Negotiate a raise with your employer
- Offer consulting services
- Contribute extra to your RRSP (and enjoy the income tax rebate)
- Choose the best cash-back credit cards and deposit the rewards into savings
Automate your savings
If you already have a budget, are living frugally and hustling for more income, it's important to make sure the money you're bringing in actually goes towards your goals, and not to impulse purchases or splurges. The best way to do this is to make it automatic. By setting up automatic transfers to your savings, you can ensure you'll meet your savings goals with almost no effort.
Pay off debt
If you started out 2017 with student loans, a car loan, or credit card debt or line of credit debt you are doing yourself a disservice if you don’t pay it off as quickly as possible. Accelerate your debt repayment by making payments whenever you have extra money available. Consider consolidating your debt onto a balance transfer credit card, which will save you money on interest rate charges and help you pay down your debt faster. If you have a student loan or car loan, add your debt as a bill payee on your online banking to make payments quickly and easily.
Check your credit score
Finally, you should check your credit score at least once per year to make sure it hasn’t changed significantly. Good news: you can check your credit score through Ratehub quickly and easily – and most importantly – for free. A significantly decreased credit score could be an indication of suspicious activity under your name, which would require you to take action. An increased credit score will give you access to the best mortgage rates and line of credit rates.