How To Build Your Financial Foundation: Manage Your Money & Plan for Your Future
Are you happy with your income? Do you believe getting a raise would make your future brighter? You’ve probably heard the old adage, “money can’t buy happiness” but many sure would like to find out.
A recent analysis conducted by Advisor Perspectives shows more money can equal more happiness at certain income levels. Apparently as people earn more money, their day-to-day happiness rises. Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.
Perhaps $75,000 per annum is not your reality and the chances are fairly good that is the case in Whistler. Especially when you consider that, according to Statistics Canada, the average wage for Canadian employees as of September 2016 was $952 per week – or just under $50,000 a year.
These may be dire statistics but what is perhaps of even more concern is that almost half of all Canadians spend more than they earn every month, and continue to sink further into debt with no plan of getting on top of their finances. The statistic comes from a recent Canadian Payroll Association survey – 47 per cent report they would be in financial difficulty if their pay cheque was delayed by even one week.
Create a Plan for Spending & Saving
Money Coach Kathi Bridge has witnessed first hand the negative impact that clients face when they keep adding debt each and every month. She suggests that people need to make a plan for spending and saving with positive and rewarding goals to work toward.
The success formula she shares with her clients is that in order to get rid of debt, people have to first stop adding more debt. Monthly cash flow (what’s coming in and going out of your account) must be a balanced amount whereby you live within your means.
This plan must also include those bills that only come up annually or a few times a year – like property taxes or ski passes. Determine how much you need each year for these less frequent payments, divide by 12 and set up an automatic transfer to a savings account.
This works great for your goals as well – whether it’s a vacation or saving for a special item you want. Open a free high interest savings account and nickname the account for your specific goal. Automatically transfer money to your savings account each payday.
Get Rid of Debt
Once you aren’t adding to your debt each month, it’s time to pay down what you owe. Set a debt free date with an online debt payment calculator. Include the debt repayment in your spending and savings plan and automatically transfer some money to your debt with every pay period.
But when it comes to money, people all too often don’t build a financial plan that includes living within their means, paying down debt, saving for a fun goal…… and then there’s retirement.
What About Retirement?
It’s not uncommon for people to avoid looking into the future, especially when it comes to considering how they will live without a pay cheque. After all, retirement is for old people, right? But your quality of life is relevant at all ages and financial planning will provide a lifestyle that you desire.
Taking a Holistic Approach to Financial Planning
It all sounds rather simple, doesn’t it? Bottom line is that people’s financial well-being depends on their ability to understand and use financial information in a way that helps them make good decisions.
That’s why I’ve partnered with Jen Underwood of Vancity to share real world advice on how to feel in control of your money and strategies to stretch it further at our April 16th Whistler Open Forum Workshop.
At Lighthouse Visionary Strategies, Cathy Goddard offers business and life coaching. She is founder of Lighthouse Mentor Network, a mentor program nominated for Small Business BC Awards for 6 consecutive years.