Your Income and Out Go

Happy 2018 everyone! Hope your December was fun and relaxing!

The times I have spent with clients to help them get a handle on their monthly spending has always been very fruitful. At first some are reluctant to put in the effort to track all of the transactions for a month but they are always glad they did. And since most of us pay with a debit or credit card there is always a paper trail.

So far the people that have committed to this exercise have been surprised at how much they spend and always vow to do better.

So let’s begin 2018 with a to do list. The goal of the to do list is to be kind to your future self.
1. Allow yourself to keep a part of all you earn. Put another way don’t spend all that you earn.
2. If you allow yourself to keep a part of all you earn then you will be prepared for a period of less income. This period can happen for a number of reasons, unemployment, disability to name just a couple. Almost every wage earner will have a period of lower income and it often is a complete surprise.
3. Balance the wants and needs of today with your future life and financial goals,
4. Then you will not fall prey to marketing and advertising.
5. Avoid unnecessary debt. Canadians are among the top in the G7 in terms of indebtedness. For every dollar of disposable income, Canadians owe at least 1.60 in debt, according to the latest Statistics Canada figures.

To emphasize that last note, in late 2017 a consumer advocacy agency did secret shopping at car dealerships in Canada. They discovered that car purchasers for the most part were given few choices when it came to financing a new vehicle, nor were they given the details of the loan they did obtain. It is now standard to offer financing for 7 years. At that 7 year mark a car owner will have paid more than the car is probably worth and may not even still own the car. Remember a car is NOT an asset, because it doesn’t appreciate in value. Don’t be swayed by the low interest rate. What is more important is the total interest cost. The total interest cost will not be offered to you, you must ask for it.

The way to achieve your future goals and to weather any storms along the way is to be prepared and have good financial habits. We all know our incomes. We also need to know  where that income is going. I am here to be your coach and accountability partner on that journey.

Next up: Important questions to ask yourself and looking at your financial life in blocks of 5 years.

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