No matter our level of financial knowledge, one thing remains the same for everyone and that is how important our finances are to our dreams and goals in life. Whether you want to retire before age 60, travel the world, or dream of starting your own business, if you don’t have the financial means to do so you just won’t be able to do it. I know it sounds boring, but unless you win the lottery or inherit a large amount, it is highly likely to remain unattainable.
In order to be able to put the odds on your side to achieve your financial goals and at the same time realize your dreams, there are some important steps to follow. As you can see, it’s not rocket science, but it will make all the difference!
1. Build an emergency fund
however, these good intentions and these important steps will be of no use if you do not make sure that you and your loved ones are well protected in the event of the unexpected. This is why it is essential that you add these three things to your “to-do list” if you haven’t already.
First, an emergency fund with about 6 months of expenses in the event you lose your job or become disabled. This fund can be in your TFSA and be invested in something that is a little volatile but still pays a little.
Another important thing is to take out life and disability insurance. If you ever have an accident (whether fatal or not) the bills will still keep coming in so make sure (literally) that you and your loved ones can keep paying the bills.
Last but not least is the will. Many people reject it but remember that in the event of death your assets will not necessarily be distributed as you would have liked it if you do not have them.
No matter how much we can do to try and prepare for life’s events, we will always have to deal with the unexpected.
Need to repair your car, take care of your pet, replace household appliances that have just broken down … If these expenses were not anticipated, it could have serious consequences on your budget, and sometimes even repercussions for months or even years if you have to make a loan.
This is why you should set aside a portion of your income each month to fund an emergency fund that will be used to cover these unforeseen expenses that may arise in the future.
In addition to allowing you to finance those unexpected purchases, this safety cushion will also allow you to limit financial stress and not have to stress when you find yourself facing one of these emergencies.
Or even worse, take out loans.
2. Have a solid personal budget
This is a piece of advice that we highlight in many of our articles because it is probably the most important when it comes to learning how to better manage your personal finances. Building and following a monthly budget is essential in order to control your money and really succeed in saving.
You may find that budgeting isn’t right for you, or that you don’t have the time or the will to follow a specific financial plan every month. Still, no excuses. Managing a personal budget is well and truly within everyone’s reach.
If you want to keep your expenses under control, the only solution will be to stick to a budget. And if you feel like you never have enough money to do everything you want to do, you can also use this planning process to prioritize your spending and fund the purchases that are really important to you.
By itself, you don’t necessarily need to follow a lifetime budget. But it is an essential step to understand your spending and to take control of your money for the long term.
3. Strengthened your retirement
Having a good financial organization will be of great help to you at the time of your retirement.
The faster you form the habit of saving, the easier it will be for you to reach retirement in an organized way. You need to establish a budget and comply with it with commitment.
4. Generate extra income
Working as a FreeLancer can be an option to have extra income. To do this, first of all, you have to analyze what your professional skills and areas of opportunity are.
Then, you will have to update yourself, look for new courses, and get the tools that allow you to be competitive and meet the needs of the market.
5. Learn to control your spending
It’s usually the little habits that pay off the most in the long run. And this is also valid when it comes to your finances.
And once it involves learning the way to save cash and limit impulse defrayal, it’s ne’er too early to start out.
By your twenties, you should already be in the habit of setting aside a portion of your income each month with a savings goal (typically 15-30% of your salary). As well as starting to put in place concrete strategies to stop throwing money away and keep your spending under control.
Without regularly looking for ways to reduce your spending so you have more money available to save and invest, you will never be able to make your money work for you.
Would you rather continue to be a slave to your spending or take charge of your financial future? Because it is not only a question of euros in a bank account but above all a question of financial freedom.
6. Start investing
Bad news for all those who planned to build their capital only with their bank books: you can never get rich just by saving.
And here again, when we talk about wealth, we are not talking about luxury cars and villas of several hectares, but indeed about financial freedom.
If you really want to build wealth, you need to think beyond the savings and start investing. Ideally, in order to truly enjoy the magic of compound interest, you should have started investing before your 30s. Waiting just a few more years to invest your money can rob you of pretty big returns on your investment in the long run.
If you would like to invest but are too afraid to invest your money, seek help from an experienced financial advisor. These professionals aim to recommend types of investments according to your lifestyle and risk tolerance to help you build a cohesive investment portfolio.
In any case, you should also start to delve into the subject of personal finance so that you have the basics to avoid mistakes and misunderstandings as much as possible (a good place to start is by reading books on personal finance. ).
The secret’s to diversify your stocks and investments to limit risk. Because overall, (well) investing often pays more in the long term than saving.
7. Define your long-term goal
If you can’t save money on a regular basis, it’s probably because you haven’t set specific financial goals with clear deadlines.
Why do you want to save money? Become an owner within a few years? Start your own business? Will you get married, have children? Retire before your sixties, or have the opportunity to travel around the world if you wish?
Define and write down a list of your goals somewhere, along with an estimate of how many years and how much you’ll need to set aside for that specific goal.
These goals will not only be a valuable motivation to save money, but also an essential tool in determining which investments you will choose. It will also allow you to see more clearly in your finances and to remain realistic. There are definitely dozens of goals that you would love to pursue, but you most likely won’t be able to do everything right away.
Your budget is a short and long-term tool, and it is only with a little patience, rigor, and work that you can gradually build the funds necessary to fulfill your dreams, even the wildest ones. !
8. Establish your financial goals
The first step is often the one that people don’t weirdly do. We go there a bit at random without a specific goal and we say to ourselves that we will find something on the way or that we will arrange things. Yet it is a crucial step. If we don’t know why we are saving money, it will be very difficult to motivate ourselves.
So take the time to write down all of your life goals. Whether it’s 2-3 years from now or whether it’s 30 years from now, that’s not what matters. The important thing is to take the time to write them down so that our savings are made for a more concrete purpose. It’s motivating to imagine yourself retiring and traveling the world, right?
9. Surround yourself with a professional
Once you know what your destination is, you have to know how to get from point A to point B. Just like a trip on the high seas, it can be stormy and that’s why you have to trust an experienced captain to arrive. safely. You have to find someone with whom it will click and who is competent since it is not just a little daily getaway, but a life’s work.
When you’ve found the right person for you, be sure to communicate your goals and when in your life you would like them to happen. Obviously, we must remain realistic. A financial advisor can’t work wonders, though!
In addition, we must also be aware that our objectives may change along the way and this is quite normal. Our needs change thus do our inclinations. We must therefore keep our advisor informed so that he can ensure that you have the best strategy in place.
10. Establish an investment strategy
Following these two steps, it is time to put in place an investment strategy with the help of your advisor. The latter will be able to allocate the assets according to your risk tolerance, your investment experience, your time horizon, and other factors in order to build the best possible investment portfolio.
In addition to this, it will be important to start systematic savings or put money aside for each payment you receive. This way, you won’t be tempted to spend it all, and you’ll save without even realizing it. You will see that with this method you will accumulate faster than you think.
11. Make sure you are well protected
However, these good intentions and these important steps will be of no use if you do not make sure that you and your loved ones are well protected in the event of the unexpected. This is why it is essential that you add these three things to your “to-do list” if you haven’t already.
First, an emergency fund with about 6 months of expenses in the event you lose your job or become disabled. This fund can be in your TFSA and be invested in something that is a little volatile but still pays a little.
Another important thing is to take out life and disability insurance. If you ever have an accident (whether fatal or not) the bills will still keep coming in so make sure (literally) that you and your loved ones can keep paying the bills.
Last but not least is the will. Many people reject it but remember that in the event of death your assets will not necessarily be distributed as you would have liked it if you do not have them.
12. Follow up annually
Following all these steps, you will need to do an annual follow-up with your advisor, but also reassess where you are and if your goals have not changed. Once a year is not that much so be sure to put it on your calendar.
You will see, the most difficult in all of this will be to keep your goals in mind and especially to stay disciplined. This is why it is important to surround yourself with the help of a financial advisor, but also an accountant, a notary, and others. Not to mention your loved ones who will support you and motivate you to follow the plan!
Get your own roof
There will come a point in your life when you feel the need to stop paying rent to embark on the search for your own home.
But at this point, many people fear for their finances. It is that there are fears that the family economy will be reduced, a situation that can be avoided if you have good planning in terms of income and expenses.
It is essential that before going out in search of your own roof, you act neatly to be able to organize yourself better. To do this, it is convenient not only to save but also to be measured with impulse purchases, because a large part of your income goes into these.
In addition, for this purpose, it will be of utmost importance that you eliminate your debts, that you resolve any inconvenience in terms of your credit history; and that you leave your credit card at zero.
