A recent poll by Maru Public Opinion showed that 7 in 10 Canadians consider themselves financially literate. However, not everyone knows the tools and financial instruments available for better financial health.
There are always ways to improve your financial health, especially if you’re new to prioritizing your finances. Here are five tips to help you manage your money and improve your financial health.
1. Stick to a Budget
Having a budget and sticking to it is one of the best ways to manage your finances effectively. Budgeting helps you have a more realistic view of your financial situation and allows you to prioritize your spending.
Break down your spending into needs and wants. Your income should first go toward your essentials, like bills, rent, food, and savings. After that, you can set aside a realistic amount for your wants and personal comforts.
There are different ways to budget your money. Some prefer writing things down, while others use apps and software. If unsure, you can explore different budget options and settle on one that works for you.
2. Create an Emergency Fund
The onset of COVID-19 and the lockdowns in 2020 were a rude awakening for many people. Many lost their jobs and income, making managing their finances even more difficult.
While such emergencies and crises are unpredictable, an emergency fund can be an adequate cushion and ensure one’s survival.
Some people use credit cards in emergencies, which can be effective if you know how to manage your finances correctly. However, this method might only work for some and could lead to further debt.
3. Pay Attention to Your Taxes
Paying your taxes on time and filing accurate tax returns is a Canadian citizen’s responsibility. Being responsible about paying taxes can help you avoid legal trouble, especially if you run a business.
The Canadian government has several resources for paying taxes, whether you’re an individual or run a business or corporation. If you’ve made some mistakes in your previous tax returns, you can correct them through the voluntary disclosure program.
Tax matters can be complicated, especially if you’re new to them or have a lot of considerations. You can consider hiring an accountant when filing taxes or for voluntary disclosure program assistance.
4. Prioritize Your Savings
Setting aside some cash for savings is often an afterthought for many people. Saving money is challenging, especially if your income barely covers your necessities. However, if you have some extra cash left over, put it in a savings account.
Saving up for financial goals and significant purchases is a safe way to achieve them. It may take longer, but it helps you avoid excess debt.
5. Cut Unnecessary Expenses
Make a habit of recording your expenses and examining them. Often, you’ll notice you’re spending money on things you don’t need or use. For example, if you’ve subscribed to streaming services you don’t use, it would help you to cancel them.
While treating oneself and enjoying life is important, spending too much can be harmful if it affects other areas of your life. It may be time to reexamine your habits if you cannot pay bills and buy necessities while spending money on non-essentials.
Money can be a complex thing to handle, especially if you’re young or don’t have a lot of it. However, adopting healthy financial habits can help you make the most of what you have and build a materially fulfilling life.
