It has been just under two weeks since we said goodbye, 2020 and hello, 2021. The anticlimactic New Year’s celebrations may have led many to forgo making the usual New Year’s resolutions — lose 10 pounds, get organized, quit (insert habit here) — but that doesn’t mean you should skip your goals.
Here are 10 objectives that can help you achieve your financial aspirations now and for years to come.
- Refresh your budget
- Build or rebuild emergency funds
- Manage debt
- Order your credit report
- Spread out savings
- Automate payments
- Spend smarter
- Compare credit cards
- Keep healthy habits
- Talk about money
Ten resolutions may seem ambitious, but it’s not a race! Plan to start small and don’t give up. You can slowly work to create healthy financial habits.
1. Refresh your budget
Many Canadians have been working from home and plan to do so for some time yet, if not indefinitely. If you are in this circumstance, consider how this lifestyle change has altered your budget over the past year.
For some, transportation costs may be down. For others, eating at home may be improving savings.
However, many people will face financial challenges, and it is essential to plan for that too.
Everyone will have a unique situation, but reviewing and revising your budget can be a terrific way to prepare for the year ahead.
2. Build or rebuild emergency funds
Canadians are becoming better savers and being cautious about spending, according to a Scotiabank survey in November 2020. The report found that more than half of Canadians (53%) have made saving for an emergency fund a priority since the COVID-19 pandemic began.
Having an emergency fund can help you better prepare for unforeseen circumstances like losing your job or home repairs.
Experts recommend saving at least three months’ worth of expenses in the case of a financial emergency. If you need to use the funds, slowly work to rebuild your savings when you can. 2020 is a textbook example of why it is essential to prepare for the unexpected.
3. Manage debt
If the holidays caused you to overextend yourself, or you’ve had a lingering credit card balance for some time, commit to paying off your debt.
It may be an overwhelming thought, and it won’t be easy at first. But by working to pay off your high-interest debt, you’ll avoid costly interest charges and save money over time.
Each payment you make will get you one step closer to your goal of being debt-free.
4. Order your credit report
January is the perfect time to check your credit score and request a copy of your credit report. It is crucial if you have large financial plans this year, like buying a house or financing a car; however, it is always beneficial to stay up to date with your rating.
You can order a copy of your credit report from each of the two main credit bureaus in Canada, Equifax and TransUnion, at least once a year for free. Spacing out your requests from each bureau can help you stay current and catch any mistakes.
5. Spread out savings
Recent data from Statistics Canada shows Canadians are saving record amounts of money during the pandemic. In the first quarter of 2020, Canadians held 7.6% of disposable income, up from 3.6% in the quarter before. In the second quarter of 2020, that number drastically increased to 28.2%.
While many people may be itching to spend again, now is the time to plan instead. Use the extra money to set up a tax-free savings account (TFSA) or registered retirement savings account (RRSP) if you don’t have one. Also, consider adding low-risk investments to your portfolio like guaranteed investment certificates (GICs).
Invest your money in a TFSA through GICs, stocks or bonds, or make cash deposits into the account. The money is tax-free upon withdrawal. Plus, you won’t pay tax on the growth of your investments within the TFSA.
TFSAs are subject to a contribution limit; however, any unused contrition room rolls over each year, and you can never lose it.
Consider opening an RRSP and begin to plan for retirement. Even if your golden years are decades away, opening an account can help you benefit from compound interest, and contributions are tax-deductible.
Saving money in an RRSP should be a long-term goal as withdrawals are considered taxable income. Additionally, you will lose your contribution room if you make a withdrawal, and you can’t get it back.
Since March of last year, uncertainty continues to surround the economy and investments. Consider balancing your portfolio with low-risk options like GICs.
Laddering your GICs is a relatively safe way to protect your principal and earn interest without having all your funds locked away at once.
6. Automate payments
Use your banking features to set up automatic payments or transfers into your savings accounts (emergency fund, high-interest savings account, etc.). Start with a small amount each month, and if you can increase that number, do so when you feel comfortable.
This way, you won’t forget to save for your short- or long-term goals.
Typically, your credit card will also allow you to set up automatic payments for the minimum balance due or the full amount owing. Schedule your bills to ensure you never miss a payment.
7. Spend smarter
Removing the unnecessary items from your online shopping cart and comparing prices are great ways to spend smarter. But you’ll also want to consider your payment preferences and vendor choices.
Often, it’s only your credit card that will reward you for your spending. But some banking packages also offer rewards for purchases made using debit. If you have the funds to cover the minimum balance on an excellent banking package, the bank may waive the monthly fee. For example, the Scotiabank Ultimate Package has no monthly fee if you maintain a daily closing balance of $5,000 in the account.
Banking packages may also offer deals on top rewards credit cards, savings accounts and more.
Make mindful purchases
Across the country, people are supporting small businesses, shopping local and buying Canadian. This movement is powerful, so try to remember these good intentions as you shop.
8. Compare credit cards
The credit card you had pre-pandemic may not be the best credit card for you now. However, the vaccine is creating light at the end of this weird and chaotic tunnel. So, if you have dreams of travelling once again, continue to build your points balance for a sunnier day.
Compare the best credit cards on RATESDOTCA
Find the best credit card for your lifestyle today!
Travel rewards cards
Many travel rewards credit cards offer flexible redemption options. Start earning points now and save for a vacation, or cash in points for statement credits, merchandise and more.
Apply for the TD® Aeroplan® Visa Infinite* Card, and you can earn 10,000 Aeroplan Points and a Bonus Buddy Pass. Plus, pay no annual fee for the primary and first additional cardholder for the first year. Conditions apply.
This offer is not available for residents of Quebec. For Quebec residents, please click here.
Offer expiry: January 17, 2021
Related read: New Aeroplan Credit Cards Arriving November 2020
Everyday rewards cards
Everyday rewards cards like grocery and cash back options can save the family money and put food on the table. Earn rewards as you shop for produce and daily essentials and cash them in for your necessities.
For a limited time, the Scotia Momentum® Visa Infinite* Card offers new cardholders 10% cash back on all purchases for the first three months, up to $2,000 in total purchases. Plus, pay no annual fee for the primary and additional cardholders for the first year.
Offer expiry: February 28, 2021
Low-interest or balance transfer cards
Some credit cards may not offer rewards or cash back, and that’s okay. A low-interest rate credit card or balance transfer option can be worthwhile. Use the low-interest rate or promotional balance transfer rate to pay down your balance and reduce your debt.
Use the BMO®* Rewards Mastercard®* to take advantage of the 1.99% introductory interest rate on balance transfers for nine months. A 1% fee does apply to amounts transferred.
Offer expiry: N/A subject to change without notice
Few credit cards offer the best of both worlds — but they do exist.
The HSBC +Rewards™ Mastercard® offers cardholders a low-interest rate of 11.9% on purchases and balance transfers. Users can earn two points per dollar spent on eligible dining and entertainment and one point per dollar on all other purchases.
However, it is always best practice to pay off your credit card balance fully and avoid carrying debt. Cardholders who do not carry a balance may get the maximum benefit from a card that focuses solely on rewards.
9. Keep healthy habits
Homemade lunches and bottomless coffee from your kitchen are just two of the many lifestyle changes that may be saving you money. Try to keep up the healthy habits and treat yourself in moderation when things open back up.
10. Talk about money
Lastly, start talking about money. It can be an awkward and uncomfortable topic of conversation, but you can demystify the subject by speaking with family and friends.
Use online resources to educate yourself on money matters and make financial literacy a priority this year.
Rates, product information, and reward estimates are subject to change at any time and do not constitute financial advice. This post was not sponsored. The views and opinions expressed in this review are purely those of RATESDOTCA. Information in this article is accurate as of the date of this posting, January 12, 2021. Read our full disclaimer.