January is the month when most us try to sharpen up and set goals for the year.  We often feel like there is something magical about a new year that can make our big or small goals come true.

Resolutions never go out of style:

I’ll start saving for my retirement, eat healthier, exercise more, improve my career by becoming a Cat Behaviour Consultant and be able to afford what I want, get out of debt on my new six-figure salary and have a comfortable lifestyle!

But every year once January is in our review mirror, our raging resolutions become fuzzy memories that get ditched to the curb. In order to start taking control of our finances, there are a couple of strategies that can help with redefining what money means to us, and creating habits that are aligned with our financial well being.  

1.     Pay attention and have intention

Money can sometimes behave like a jaded friend when you ignore it. It may seem to reject you by publicly declining you in front of the teller when you have bagged the groceries It might take an unexpected trip to NSF land when your mortgage comes for a visit. In order to nurture your relationship, make sure you have a weekly check in.

  • Review your expenses and note down where your money was spent on a weekly basis. An important question during this review process would be to ask yourself whether your money had an assigned role or not. This weekly check-in applies whether you are a high-income earner, or you are doing financial acrobatics. Paying attention to what is happening to your finances helps you in having clarity in what areas need to be revisited and redefined instead of feeling overwhelmed and lacking control.

2. Treat your Investment relationship like a necessary expense

The financial well-being in your relationship rests on being able to re-invest in yourself whether your think you have very little to offer. If you pay rent/mortgage or car insurance, your savings/investments should not be left as an afterthought.

Add your name on the fixed expense list and then calculate how much money is left over. IF you do decide to invest with money that has been left over after taking care of all the other expenses, achieving your financial goals will be optional and not a priority. People who regularly save, improve their financial situation faster than those who don’t.

3. Self reflect and question your money history

  • Why do we have a toxic relationship with money?
  • What kind of baggage is your financial relationship carrying?
  • I’m I a high income earner and yet I find myself broke because that is my margin of “safety”?

Many factors can lead to financial stresses, and these underlying invisible trip wires can block us from surpassing a certain level because we are stuck in a continuous feedback loop of making the same financial mistakes over and over. When you pause and dig deeper you start to realize that you may have assigned yourself a role that is no longer fitting.   

  • Perhaps growing up your family struggled, and now you self-sabotage because you feel guilty over your financial success
  • Maybe you experienced a major financial setback and this impedes you from enjoying your hard earned because of the fear of losing it all.
  • Or you come from a wealthy upbringing and you feel the pressure to maintain a certain lifestyle. It’s best to unpack these behaviours by understanding your unique money stories and taking concrete steps towards developing a healthier relationship with money.

4. The devil is in the details of your credit report

Do you remember the last time you checked your credit score? A credit score can impact your cost of borrowing which in turn impacts how long you stay in debt and how much in interest you end up paying. Good thing in Canada you are allowed to pull one Free Credit report per year.  This allows you to check whether the debt you are carrying is actually your own debt and not some else’s. If you don’t recognize the debt, immediately contact the credit reporting agency to rectify the situation!  Because It can be heartbreaking thinking that you have good credit and want to purchase a home only to find out you don’t qualify due to poor credit that was not of your own doing.   

Note: if a good friend, relative or acquaintance asks you to co-sign or guarantee a loan, tread carefully. I actually mean that you should scurry away like you are fleeing the bubonic plague. Once you sign on the dotted line, their debt becomes your debt.  

5. Respect the credit

Your credit card should not tap dance like a famous artist on Broadway. Cut that ambitious and costly career fast! We usually don’t calculate the TRUE cost of carrying debt and this in turn affects how long we stay indebted to paying the interest instead of the actual loan.When we see a minimum payment of $50 on a $3000 credit card debt we usually think that the payment is quite “affordable”. Realize it will actually take you approximately 12 years to pay it off AND you will end up paying more than $5000 for that original debt.

  • Ask yourself how much you would pay for a prospective purchase if you were paying cash out of your pocket.  You might answer that you would pay a lot less or you might even not make that purchase at all.

It’s also important to remove your credit card payment information online, to make purchasing items inconvenient. While you look for your credit card information, this momentary break allows you to reset the surge of happiness that you get when you press “pay”, in turn you question whether the purchase was warranted or not.

Here’s the thing.

  • If you don’t focus on the details, then your mistakes will define your financial future, causing undue stress.
  • At this point, I hope you’re beginning to visualize your financial leakages. Now, it’s time to tie the loose ends.

6. Improve your financial literacy

  • It’s important to get into the habit of asking questions if you decide to employ someone as your financial planner, your realtor, your mortgage agent or your accountant.
  • How are they working in your best interest? Are their recommendations based on a referral arrangement they already have with another financial institution?

It is rewarding to learn the basics in personal finance because, at the end of the day you are the only one who gets to live with the repercussion of your financial decisions. Start learning to:

  • Listen to your intuition & Learn to trust your gut instincts.
  • Discern the truth from charismatic personalities. If something sounds too good to be true, and you are not ready to make a decision, take the time required to find your focus.

Get financial freedom fast!

Financial success is achievable only if you pay attention to your money and commit yourself to healthy financial behaviors. Consider your overall financial goal for 2020 and build habits to make better financial choices, leading to better financial health All your financial decisions and activities affect your financial health now and in the future.

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This blog is intended to provide general information and for discussion purposes only. Accordingly, the information in this blog is not intended to constitute accounting, tax, legal, investment, consulting or other professional advice or services. Please consult a qualified professional advisor before making any decision or taking action that might affect your personal finances or business.