2019 has been an eye-opening year for everyone, especially when it comes to finances. If you haven’t heard the news yet, consumer insolvencies are rising in Canada and will continue to do so. If you want to avoid insolvency, follow these tips to get you back on track:
Start a budget or financial plan and stick to it!
By reading our previous blogs you know how important starting a budget is to financial success. Start by tracking money coming and in and going out. Keeping track of each expenditure no matter how small, will give you the accurate information to start with. Once you know where your money is being spent, you can then set a budget* for yourself and/or your family.
*Tip, use of a budgeting app on your phone makes tracking your spending and sticking to a budget super easy. Try one of these: Mint, PocketGuard, YNAB, or Mvelopes. Please make sure to review the privacy settings prior to installing as these may have access to your banking information.
Set financial goals
After you have a clear picture of your budget and financial plan, it’s time to set financial goals*. Your goals should include short, medium- and long-term goals. The smartest first goal for anyone is to set up a short-term emergency fund. Once that has been established, you can move on to medium- and long-term goals such as vacation, vehicle, retirement or education savings. Make sure to value your goals and set a timeline that is achievable. Once the goals are set, you can go back to your budget and ensure there is room to meet these goals.
*Tip, read our previous blog on setting financial goals here.
Repaying your debt
Wouldn’t it be great to be debt-free for 2020? What if after payment your monthly debt payments, you find nothing left for financial goals or worse, you realize that your expenses are exceeding your income and each month is a struggle. In that case we encourage you to speak to a Chartered Insolvency and Restructuring Professional (“CIRP”)* about your options.
*Tip, click here to find a CIRP near you
Talk to your family about budget
If you have a partner and/or kids, it’s smart to include everyone in the family in these discussions, at an age appropriate level of course. Your partner should be fully on board with the financial plan going forward and your children* should be made aware of certain spending limitations. Talking to your children at an age appropriate level will help educate them and give them some basic money management tools that they may not have otherwise.
*Tip, check out the Financial Consumer Agency of Canada’s page: Teaching children about money
Shelley Koehli, LIT, CIRP
D. Thode & Associates Inc.
Licensed Insolvency Trustee