Your Money Your control- A win-win situation

Your Money Your control- A win-win situation

Neither there are less books on managing money in the market nor there is a dearth of information available on internet but still Canadians are struggling with high debt, low savings rate and tough retirement. A question is that  how long we will keep thinking that Government money is sufficient for having a comfortable retirement? Do we know our numbers, I mean financial numbers:

  1. What is my Gross Income?
  2. How much tax I pay?
  3. What is my RRSP limit?
  4. Why and how can I save money?
  5. What is my weighted average return?
  6. Am I on track for a comfortable retirement?
  7. When and how can I be debt free early?

We do talk about these topics off and on when we sit down with our friends in a party or lunch rooms, in a library or standing on a bus stop but in practical life do we know our numbers? The answer is no and what makes things more worse is that precious amount of time is lost in the struggle of keeping with budget. It is a common adage that plans never fail, people fail to plan.

Knowing your budget

The first and foremost question we must ask to ourselves is do we have a home budget? Are we tracking our expenses, type of transactions, number of transactions, and discretionary expense vs. non-discretionary expense? Our income is coming from one source and is going into many hands in the form of goods and services purchased from those people. The spending of an individual or family is impacted by sale signs and discounted products being displayed in shops. In the whole process some people make impulsive decisions or buy more than what they need or in other terms they create a warehouse in their own home. A considerable amount of money gets locked up which otherwise would have been invested. Start living within your means and buy what you need.

Know your net worth

Eat less, work out daily and enjoy a long healthy life. We all know about this slogan but we all struggle with obesity, laziness and stress.

It is very important to know what is my current financial situation, how much do i spend, how much i save, what is my current debt situation and what is my net worth. Any company’s balance sheet is true indicator of financial health and it gives us good insight about its affairs and profitability.

 If we know our situation well we can make sound and strong decisions in our financial life thus bringing desired financial strength. If we are spending more than we make then one day we will drown in the sea of debt or we will get so choked that our financial future can be ruined. Our financial balance sheet must be healthy- more assets vs. liabilities, more savings and better investment returns.

Making decisions

In our lifetime we have made thousands of decisions and every day we make a decision like dress  we are wearing, TV programs we are going to watch or restaurant where we are going to dine. Life in simple terms is deeply impacted by sum total of all decisions we have made for ourselves. If we look at our wardrobe, it is full of clothing and some of them we have never worn or our TV at home has over 500 channels but we only watch3 or 5 channels which are our favourite. 

It means when it comes to making financial decisions in our life we need to be fully aware, educated and critical in nature. Making wrong choices can lead to big losses. Some important questions to be asked to yourself; Who should be our financial advisor, how much protection do i need, what is my investment goal, when and how I will get desired amount of money at stipulated time. Be educated not be sold in life.

Debt Trap

The introduction of credit cards to consumers in Canada in late sixties was a well thought idea to make purchases as well as purchasing experience more satisfying. The credit card will help people buy products and services throughout the month and then they can make payments at the end of month or even within grace period. But looking at trend of last three decades the situation is pointing to a different picture: 1. More consumer debt on an average Canadian 2. Line of credits, Mortgage and HELOC 3. Car loans etc…. The trend is showing that we are spending more then we save. Our national savings rate has gone down drastically and is at it’s lowest 5-7% range. In contrast, savings rate in Germany is 15% and even South Korea is leading the chart with 12%. Few things we must keep in mind while shopping: 1. Buy what you ca afford, 2. Pay your bills on time, 3. Stay away from 0 interest credit cards, 4. Need vs Want- Make an informed decision.

Inflation and Taxes

Your money is not worth the same value from a year, 5 years or 10 years from now……Is it scary or a bitter reality? We cannot escape from this rather we must acknowledge the fact that we need more money in the next year to buy same amount of goods or services. 

Another bitter truth is that we are living in a highly taxed developed nation. Whether it’s direct taxes or indirect taxes; Government of Canada does not leave more than 55 cents in our pockets against a dollar earned. Indeed we are facing more taxes on gas we are burning in our cars, removal of tax breaks on children activities, art, fitness and even day care. The ugly truth is the more you make the less benefits you get under social programs. I do not know whether Government of Canada is promoting a culture of growth or it is motivating people to become more burdens on state.

One thing I can assure you is that if you seek help and guidance from professionals you can better manage your money, taxes and strategies to save more taxes and build a big family money tree to pass on generations. We all are living in present but always worried about future but good idea is make your present better for an excellent future opening. Tax planning must be at core of our money management.

Investing Money

“Money saved is money earned” We all grew up listening to this statement or adage. Saving is at the core of our gene and we all want to save for future. But realty is that saving is not enough as if we fold our money and put it in our pocket and after a year it is a same dollar. I mean to say is with rising cost of living we need more money to buy same service or product. Most importantly, if we want to turn our savings into a retirement vehicle or we need money to cover an event at future date like children education, buying a car etc. We must invest money to make a desired return after tax and after inflation which will make our money worthy of cause at later date. Since we are not expert in investing because of lack of knowledge, experience, time and research we ended up making wrong choices and thus poor returns. Money is lost something is lost but time is lost everything is lost. Our Time, money and return equation is very important to us. It is better to ask for a professional help to manage your money. Instead of you making poor selections, a professional planner or Financial advisor will do all the homework for you to invest in diversified asset classes, geographies, industries to book consistent and progressive returns.

Our life experience is sum total of all the decisions we make for ourselves. The favourable the results the good we feel and wise a versa. Poor decision making process is root cause of all the problems. Financial literacy is very important to understand the basics and combined with professional help can bring desired results in life. I am always happy to provide honestfinancial adviceto my clients to bring positive change in their lives. I bring on table honest and professional approach to do risk management and financial management for my clients thus ensuring strong and prosperous today and tomorrow. Feel free to contact me for no obligation consultation at 416 833 8533 or email:saurabh@lifecareinsurance.ca

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