Insurance Money Management

Make 2021 the Year of Your Finances

By  Derek Condon

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Every New Year we get a fresh start. It’s a new year, a new sense of motivation, and inspiration. The feeling that anything can happen. This is my year. 

We all feel it, whether we have like goals or not. That’s because no matter what are goals are, we are all looking for self-improvement. Whether you’re looking at getting in shape, changing your job, graduating school, going back to school, or anything else.

A common one is getting your finances in order. Maybe you’ve been carrying some student loan debt longer than you’d like to admit. Or you’re just finding that every week you’re stretching your paycheck out so thin you can see through it.

This article is all about simple steps you can take to kick butt and make huge improvements. Once you improve your finances it doesn’t just impact your bank account. But by having things is order it’ll make a positive difference in so many aspects of your life.

It can be really easy to start a New Years Resolution project and then put it on the back burner. We’ve all seen the memes like a gym on January 1st (absolutely packed), compared to February 1st (a ghost town). So the best thing about this list, is you can complete it in a very short time and then sit back and reap the rewards.

Bank Smarter

How much does your bank charge you each month for your accounts? Do you have money in a checking account (low interest) or in a savings account (probably still low interest)? Do you have credit card rewards? Do you make your minimum monthly payments or do you pay off your credit credit in full each month?

I know that’s a lot of questions, but if you’re looking to save money, start with where your money actually is. I use my credit card for all of my everyday purchases, reason being is I earn cashback and I pay it off in full each month (they make no money from me). Banks will usually have a flat monthly fee for a checking account that will allow for a certain number of transactions a month, or you pay per transaction. I have my checking account set up per transaction so it’s basically free.

Another aspect to review is how you actually save. Most savings accounts are horrible, and many ‘high interest savings accounts’ aren’t good either. They could have a decent introductory rate, and then they drop off. So low that you could probably make more money by picking up coins throughout the day. Do your homework and make sure to read the fine print.

Automate Your Investments

You probably know that you should invest, we all should be investing. But are you? If the answer is no, then you’re not alone. Most people aren’t aware of all of the benefits of investing so we put it off. We look at it as something we will start doing when we are older. But the best time to start investing is always right now.

Consider an app like Wealthsimple or Robinhood to get started with investments. What I always recommend to people is get an account set up, and then start making automatic monthly contributions. And start small. Start with an amount that you’ll be able to easily afford to contribute. Even if it’s $20/paycheck. Once you make it a habit, you’ll forget that you’re even contributing. Then one day you’ll look at your account and be amazed with how much you’ve secretly saved up.

And seriously, once it’s set up (takes about 20 minutes) just forget about it. You don’t have to put any more work into it. So it’s a super easy hack. It’s the one New Years resolution you can forget about after and it’ll actually be okay.

Protect Your Future

When is the best time to get insurance? The truth is when you’re young and healthy.

Insurance is cheapest when you’re young and in good health. And since those two things can change very quickly, it’s actually risky to wait for ‘the right time’. The right time is always right now.

It’s not only your own health that can impact your insurance either. If you have a close relative (parent, or sibling) that has health implications that could cause you to have an exclusion on your policy (they won’t cover that specific health implication), or you may have to pay a higher premium.

A nice feature of insurance is the guaranteed renewable options. When you get a policy in place, it can come with guaranteed renewable options. So in the future, no matter what happens to your health you can always have insurance in place. This is great. If you’re young and healthy, getting some basic insurance in place protects you now, but it also protects you and your family in the future. No matter what happens, they will be protected. And it doesn’t need to be expensive, for a healthy non-smoking 25 year old, getting $500,000 in life insurance for about $20/month isn’t unreasonable. It’s a small price to pay for a lifetime of peace-of-mind.

Budget, Budget, Budget

Having a budget is an important step in being better with your finances. And I don’t mean stick to a strict spending routine. But I mean actually being aware of what you’re spending money on.

My favorite budgeting app that I’ve found so far is Mint. It’s absolutely free, and comes with so many great features. You can link your bank accounts, credit cards, and even investment accounts to track everything on one easy app. It’ll show balances, transactions, and you can even set reminders to notify you a few days before bills are due. Then you’re not forgetting to pay a bill because you’re too busy.

Seeing and knowing what you spend money on will allow you to be in a position to review and justify your spending. You might even be shocked at somethings you’re spending money on and it’ll then be easy to cut that down. Also, seeing your transactions might bring something to your attention. You might have an old subscription you’ve been paying $20/month for but haven’t used in years.

Knowing where your money is going in not a negative. It’s a great way to make sure your hard earned money is making its best use.

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The Bottom Line

There’s no excuse. 2021 is your year. To recap:

  1. Review your banking and make sure it’s working in your best interest.
  2. Automate your investments so you can just forget about it.
  3. Make sure your future is protected by getting basic insurance.
  4. Be aware of your spending habits so you can optimize them.

These are easy things you could all complete in an afternoon or a day. It won’t only put you in a great position for 2021, but a great position for the rest of your life.

So what are you waiting for? Make 2021 the year of your finances. The year your future self looks back on and says ‘that’s the year everything changed for the better.’

Derek Condon

About the Author

Derek Condon

Winnipeg based Financial Advisor focusing on investments, financial planning, and mortgages. I prioritize education, because I believe the more we know, the more we all benefit. It allows me to help people make the most of their financial future. 

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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