While it’s always a good time to get your finances in order, the new year has many Canadians taking a look back at their “year in money” and making plans for 2022. It can be overwhelming, especially if this past year is the first time you’ve held an “adult job” — you know, with a salary and benefits to budget around.
Forgive yourself for past money mistakes
Before you can create new goals, Bartley says you need to forgive yourself for any money mistakes from your past. “You can’t keep carrying that past mistake around with you for the rest of your life,” she says. “So you have bad credit. OK, that doesn’t mean you’ll have bad credit ‘til you die as long as you change course.” It’s all about being able to let the past stay in the past so that you can start planning for a better financial future.
Make peace with where you’re at financially
Forgiving yourself for any past money mistakes is a great first step, but accepting where you’re currently at is a small step that will help you make significant progress. Making peace with your current solution will help everything from debt repayments to building a robust savings account seem less overwhelming, Bartley says.
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Set personal financial goals for your needs
This sounds like obvious advice, but it can be hard to know where to put your energy when it comes to setting goals. There’s so much external pressure. So, instead of fixating on where you should be right now based on what your peers, parents or your favourite TV show tell you, think about what your priorities are.
“If you’re going to be looking at all of the external things you should have by whatever age, it’ll lead to anxiety,” Bartley says. Once you decide what exactly your financial priorities are (whether it’s paying off your student loan debts, storing up money for a house or growing your personal savings), it’ll be easier to rejig your budget and allocate money to your specific goals and priorities.
It’s not the destination, it’s all about the journey
Once you have a goal in mind, don’t forget to make a detailed plan with every step laid out. Not only will this make it easier to follow your plan, but it’ll take away some of that anxiety that may come with thinking about the future. “I think a lot of the time, anxiety that comes on is either about looking at what you did in the past, or looking way too far in the future and you can’t see what the steps are,” Bartley says.
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Break your financial plan into attainable benchmarks
Just because you make a detailed plan, however, doesn’t mean you’ll follow it exactly. New Year’s resolutions are notoriously broken — Bartley points to the spike in gym membership sign-ups that occur in January and compares it to how quiet the gym is once February rolls around. This is where breaking out your plan into smaller steps can help.
For example, if you’re saving up for a big vacation, rather than just focusing on saving the total amount up by a certain date, try to set benchmarks for yourself between now and when you’d like to reach your goal. “It’s important that we do the work to really break down what’s involved in your goal,” Bartley says.
Keep track of your financial progress
Another money-saving tip Bartley points to is to keep track of your progress. This might be through an app or even a journal. “Our human brain will deceive us and betray us every single time if we try to just keep it in our head,” she says. Having somewhere to write down your goals, which benchmarks you’ve reached and any setbacks you encounter will help you remember exactly what you need to do (and what you promised yourself in the beginning) and keep you on track.
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Stay on top of all your expenses
As you move through your plan and check off benchmarks, it’s possible that you realize you’re not spending your money as efficiently as you could be. Gaining an awareness of what you’re spending money on will help you see parts of your budget that could be used more efficiently. Saving money isn’t always about hacking away at all your expenses, Bartley points out. It’s also about being aware of what you’re spending money on so you can recognize spending habits. It’s the first step in building a budget that is personalized and will work in your favour.
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Celebrate every win — even the small ones
“Don’t make it seem like you’re only going to get the gold star when you reach your goals,” Bartley says. “You are getting gold stars in between by being responsible and working at your goals every month.” If one of your goals is repaying your student loans, celebrate yourself every month when you make a payment. Celebrating good habits is just as important as nipping others in the bud.
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Do your research on how to save your money
If you’re a millennial or Gen Zer trying to pick out a savings account for the first time, it can definitely be overwhelming. There’s a plethora of options out there and it can be hard to decode the language — like, what’s a Tax Free Savings Accounts (TFSA)? Or a Registered Retirement Savings Plan (RRSP)? Knowledge is power and Bartley recommends going to a bank (there are several where you can open up a savings account without additional fees) and speaking with an advisor to help you decide what kind of account is best for you and your needs.
Get into the swing of saving, no matter the amount
“Even if it’s just $5, I don’t care, make it a habit,” Bartley says. “It’s more about the habit than the amount. In the beginning, it’s about establishing that habit.” Once you get into the swing of putting an amount — any amount — into your savings account every month, when you can afford to drop more money into it, you’ll already be used to saving on a regular basis.
Don’t forget to have fun
“I’m not going to tell you ‘don’t eat out,’” Bartley says. On the contrary, setting aside a part of your budget for going out is a key part in having stress-free fun. Plus, once you’ve allotted a set amount for fun, you can work with the rest of your budget on longer term goals like saving for a down payment.
If you just entered the workforce, start saving for retirement — now
Even if you’re new to the savings game, one of the best things you can do for your future is to start saving for retirement. Like, now. Sure, you just entered the workforce and you probably won’t retire for at least another 40 to 50 years. But if you start now (and, if you put your money into a high interest savings account, where your money will grow without you having to do anything), your money will have more time to accumulate.
Every little bit counts — really
No matter the end goal, whether it’s saving or paying off debt or contributing to a retirement fund, there’s no such thing as “too little.” Putting in as little as $5 or $10 at a time and slowly watching it grow is both motivating and gets you closer towards your goal, Bartley says. If you don’t want to go the bank account route, using a good old-fashioned mason jar so you can visualize your savings is another great option.
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Look into investing
“Saving is just deferred spending,” Bartley says. “If you want your money to grow and accumulate, you need to go the investment route.” Get started by researching the types of investment opportunities out there — it could mean getting into a mutual fund or learning about the stock market.
Consider a year-end review of all your finances
Doing a year-end review of your finances will help you keep tabs on your spending habits and better inform your choices going forward. Bartley suggests asking yourself questions like: How did you use your money? How much did you earn? How much did you spend, and on what? “It’s not about looking at it from a perspective of being harsh or punitive towards yourself, it’s about gaining insight on where your money is going,” she says. “Once you know what you did this year, you’re going to get some lessons out of that and tell you what you can do differently next year.”
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