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It's Your Money  

Steps to financial freedom

With Canadian debt loads out of control and many more people closer than ever to insolvency, it’s time to start taking your finances more seriously.

So many people feel overwhelmed and don’t know where to start, but that is no excuse to not act!

The good news is that anyone can take control of their finances in 2019 and the following 10 steps will go a long way to putting you back on track:

Create a plan – The most important thing you can do, and the best way to start, is to commit to creating a written financial plan that will outline your goals and create a roadmap to reach them.

Build a budget – The earlier you can maintain a firm understanding of your cash flow, the earlier you can start taking control of your finances and get yourself on track to achieve your goals. Much like your financial plan, your budget should be a living document and updated regularly.

Tackle your debt first – Your financial plan should put initial focus on paying down debts, starting with those that accrue the highest interest rates. For those debts that will take time to pay off, look at available options to reduce the interest rates charged.

Start an emergency fund – A well laid-out financial plan can be destroyed by an unexpected emergency. Enough to cover three months of expenses is a good starting point.

Review your risks – What would happen to your finances if you were injured or sick and off work for six months? How would your family get by if you were to pass away tomorrow? A risk assessment should be a top priority and appropriate insurance should be attained.

Begin the estate planning process – Do you have a will, power of attorney and a health representative agreement in place? Are they up to date? These vital documents help ensure you and your loved ones are protected and can give you a lot of piece of mind once in place.

Ensure your investments match your needs – An investment portfolio review should be conducted to make sure that your investments are suitable for your current situation and risk tolerance.

Open a separate savings account – Are you planning a big vacation or have some other kind of one-time expense coming up? If your trip is nine months away, setup a separate savings account and put one-ninth of the total amount you’ll require in each month to have enough to pay in full and not end up putting the trip onto a credit card and adding to your debt.

Be philanthropic – But do so strategically. Your budget will help you understand how much you can afford to give and how to maximize the tax planning opportunities.

Communicate your wishes – Create a summary of your full finances including every account, asset and debt that you have and include information about your financial planner, lawyer and any other professionals that you use. Share this information with your loved ones.

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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and will take over as board chairman in June. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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