Today, Monday, January 19 – also known as ‘Blue Monday,’ is the most depressing day of the year, affecting 10% of the Canadian population with low motivational levels and depression over financial remnants from the holidays.
Money is the leading source of stress amongst Canadians (even more amplified at this time of year) and can lead to snowballing effects on overall health, well-being and happiness. As a result, more experts are encouraging individuals to take stock of their finances and create a plan for 2015 that will allow for improvement in other area’s of one’s life.
Here are a list of tips provided by BlueShore Financial:
1. Be prepared for a rainy day
Whether it’s a new transmission, replacing a roof or making an emergency trip to care for a loved one, unexpected expenses can arise. The rule of thumb is to have three months’ salary saved as a safety net. Or you can set up a line of credit for emergency use only.
2. Get rid of credit card debt
If you are carrying a balance month after month on your credit card, you are paying too much interest. If you can’t pay off your credit card in full each month, limit your use of the card. Or transfer your balance to a lower-interest line of credit.
3. Give yourself a reason to save
Make a list of your goals and prioritize them. Then get advice on the best way to save for these goals. A high interest savings account might be better for a short-term goal while investing in the market may be appropriate for a long-term goal.
4. If you have children, get organized with RESPs now
The average cost of a college education is $7,500 to $20,000 per year. Ensure you’re contributing to RESPs and make sure you’re maximizing the Canada Education Savings Grant, which tops up your contributions with a 20% government grant.
5. Figure out your annual 2015 income now
If you expect your income to increase in future, consider taking a higher RRIF (registered retirement income fund) payment and allocating some funds into your TFSA for 2015. If you expect your income to decrease in future, consider making a higher RRSP contribution this year.
6. Cut your losses
If you are investing, cut your losses before they become substantial and let your profits run. Successful investors can lose over half the time as long as losses are not allowed to compound. Giving profitable trades room to continue their upward climb takes a tremendous amount of courage, but will likely pay off in the future.
7. Make this the year you get a financial plan
Stop procrastinating. Go to a qualified professional who will look at your overall financial picture and give you peace of mind that you are set up for long-term financial wellness.
Feature Image: Young and poor via Shutterstock