Financial Power

How you manage your money today affects your lifestyle in the years to come. And it’s never too late – or too early – to ensure a healthy fiscal future. Where to start? These age specific tips are very simple, but they’ll have a big impact on your bank account.

If you’re wondering where you’ll find extra cash, consider this: Skip one $3 latte a day (I wonder if you can get a latte for $3, in some places like Starbucks, they closer to $5 then $3, we call it “Fivebucks”) and you’ll have an extra $1,095 a year to invest in you.
The best strategy: Start saving early – and do it consistently.

In Your 20s

Pay yourself first. Retirement may seem like a long way off, but money you sock away early in life has the biggest impact on your bottom line simply because it has more time to grow. Try to save as much as you can afford in your RRSP or 401(K) – at least enough to get your employer’s matching contributions. With RRSP you’ll get the tax breaks and with a good plan you can pay more in your RRSP instead of paying more taxes for the government.

Establish Good Credit. Make credit-card payments on time, and get the habit of contacting the three nationwide credit-reporting companies (Equifax, Experian and Trans Union) once a year so you can ensure your credit report checks out when you go to make big purchases later, like a car or a home. Get Your Equifax Credit Report Now! At this age learn to buy everything for cash. You have to be able to understand the difference between: “a want” and “a need”. Focus on your needs, pay cash for them and save as much as possible.

In Your 30s

Build an emergency fund. As a rule, you should aim to save at least three months’ worth of expenses as a safety net. To be on the save side, try to have a six –to- eight month’s worth of expenses. What’s the easiest way to get started? Set aside extra income such as tax refunds and bonuses.

Buy Real Estate – be it an apartment or house. It’s the single smartest purchase you can make because most real estate appreciates at a faster pace than any other investment.

Have a life insurance policy. If you have a family and kids is really important to protect the security of those who are important for you.

In your 40s

Buy stocks. Stocks can offer a greater potential return than bond funds. One of the best ways to invest in small amounts is through Direct Stock Purchase plans, which allow you to buy stock directly from companies.

Hire a financial planner. Put money into your financial education by sitting down with an adviser who can show you the ropes. A financial planer can work with you to establish a budget and a spending plan. But don’t simply let them tell you what to do; use it as a learning experience. Ask for clarification of terms you don’t understand and get a good explanation for why the investment makes sense for your money goals.

Eliminate your debt. If you accumulated some debt over the year this is the time to focus on eliminating your debt, with a debt elimination strategy.

Related posts:

1. Begin again in 2010!
2. Choose the right savings vehicle for your dreams.
3. How To Get Out of Debt?
4. Tips for Making a Wise Insurance Purchase
5. How TFSA can pick up where RESP leave off.
6. Holiday Spending – without Holiday Debt.
7. What is Debt Consolidation?

Tags: Add new tag, Financial Knowledge, Financial Security, Life Insurance, Personal Finance, Steps to financial independence

This entry was posted by FP on Wednesday, July 22nd, 2009 at 12:16 PM and is filed under Debt Elimination, Financial Budget, Financial Knowledge, Financial Plan, Life Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.