Gain greater confidence over your finances

November 9, 2018

By Kelley Keehn, award-winning author, personal finance educator and consumer advocate for the Financial Planning Standards Council

More than ever before, Canadians are concerned about their finances.  According to a recent survey from the Financial Planning Standards Council, 41% ranked money as their greatest stress – more than their personal health, work and relationships.

And there’s a four-letter word that’s causing a lot of people to lose sleep at night – and that’s debt!  We have more of it than ever, owing $1.71 for every dollar we bring in.  To put that in perspective, we only owed around 66 cents for every dollar we brought in during the 1980s. Why?  The answer is simple economics and the number one rule of it - incentives drive the market!  When interest rates were in the double digits a few decades ago, no one was renovating their kitchen or ticking off their bucket list with a line of credit (I’m not even sure they existed back then).

Don’t get me wrong. Access to inexpensive credit can be a good thing. We’re able to buy homes earlier, go after that university degree even if we don’t have the savings, and we can buy a car and spread out the payments over several years.

Invest in your financial well-being

The problem comes when debt balloons and the payments eat up more than you can handle.  The fact is, right now, half of Canadians are just $200 away from not being able to pay their bills and one third are worried about bankruptcy – and, that was before the government raised interest rates on October 24 of this year.

And Canadians are embarrassed too about lacking control over their finances.  That’s why many people don’t seek out help or just hope their problem will go away. But it never does on its own.  And there are negative impacts of financial stress – on you, your family, your health and your overall well-being. 

But the good news is, there have never been more resources available to help you take control of your finances – both online and in-person.  Check these out today to gain greater confidence in your financial life:

Get your plan together now

  • Work hard to build your emergency savings account and get it fully funded. Experts estimate that you should have around 6 months of your income in a safe, accessible account.  This will give you a buffer should an emergency pop up, so you don’t have to rely on your credit card.
  • Declare a debt-free day.  Sounds great, right?  Set a date that you’d like to have all of your debt paid off (excluding your mortgage). Work backwards from the date to see how much you need to save each year and month.  
  • Use one of the above calculators to see just how much of a dent one or two extra dollars a day can put into your debt. FCAC has a great Financial Goal Calculator that can help you figure out your debt-free plan.
  • Check your credit card rate.  If it’s high, call up your bank to see what other options exist for a lower rate card.
  • Don’t be late with your credit card payments – even one day!  Doing so could bump up an already high rate even higher!  And it could impact your credit score for years to come. 

Lastly and most importantly, don’t think you have to go it alone. If your debt is stressing you out and you don’t know where to start, reach out for support.  Contact a non-profit credit counsellor or Certified Financial Planner to help you create a plan.

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