34% of Canadians are in bad or terrible financial shape, especially since there’s serious inflation since 2022. Considering that around 50% of the nation is struggling to feed their households, it’s very likely that you’re feeling stressed out too. While you can’t do anything about inflation, there are various steps you can take to get your financial health in order. Once you do that, it won’t feel like you’re struggling to keep your head above the water, and you’ll have much better mental health too.
Keep reading to see what steps you need to take to improve your overall financial health.
Set Clear Financial Goals
They say you shouldn’t work to live, but many people find that they’re in the 9-to-5 grind without any clear goals. This can have a negative effect, as you’ll feel like life’s aimless.
You can make a fantastic start on your financial health by establishing specific and realistic goals. For example, you might want to pay off your debts, or you might want to save up for a new house. Or it can be as simple as saving for retirement in the future.
Whatever you choose, having well-defined objectives can help you stay focused and motivated.
Create a Budget
A budget is a must-have for anything regarding your financial situation. Without one, you can’t manage your finances effectively.
First, track your income and expenses to determine how much you’re left with at the end of each month. You should also categorize your spending and identify areas where you can make adjustments.
By doing this, you’ll ensure that your expenses are lower than your income. As a result, you can save and invest the surplus.
Reduce and Eliminate Debt
Altogether, Canadians have a record debt total of $2.32 trillion. Chances are, you’re a part of this statistic, and those negative numbers are stressing you out.
The next step is to get out of debt to be in good standing. You can develop a debt repayment plan by prioritizing the ones with the highest interest rates.
One method you can try is the debt avalanche strategy, where you focus on paying off the highest interest rate debt first. On the other hand, there’s the debt snowball, strategy, where you pay off the smallest debts first to gain momentum.
Keep in mind that when reducing and eliminating debt, that doesn’t necessarily mean you can’t take out more loans. As long as you do it smartly, temporarily taking on more debt can pay off in the long run.
Build an Emergency Fund
Now that you’re on the right track, you can start building an emergency fund. You never know if something unexpected will happen, and you want to be prepared. Otherwise, it can send you back to square one.
This emergency fund should be enough to cover things like medical bills and car repairs. In general, aim to save at least three to six months’ worth of living expenses in a liquid and easily accessible account.
This will be your safety net to prevent you from going into debt during challenging times.
Save and Invest
Any extra money outside of the emergency fund should be saved and invested. These things are essential for long-term financial stability and growth.
You can automate your savings by setting up regular transfers from your paycheck to a separate savings or investment account. Plus, research different investment options, such as stocks, bonds, mutual funds, or real estate, based on your risk tolerance and financial goals.
Diversify Your Income
Take it a step further and diversify your income in addition to saving and investing it. You might already have a main job that’s stable, but you can always do more.
Having multiple sources of income can provide you with financial security and increase your overall earning potential. This results in more of a buffer when you hit hard times, and it’ll be easier to make big purchases too.
Consider starting a side business, freelancing, or investing in income-generating assets. Think about your strengths and talents, and play to those.
Review and Adjust Regularly
Your life circumstances will certainly change, as will your financial goals. So it doesn’t make sense to keep doing things the same way if things are different.
It’s a great idea to periodically review your financial situation and make adjustments as needed. Revisit your budget, track your progress toward your set goals, and reassess your investment portfolio.
Doing all these things will ensure your financial plans evolve as your life does.
Get Professional Advice
If you’re still feeling lost, or just want some reassurance, it can be wise to consult with a financial advisor or planner.
They can review your financials and provide personalized guidance based on your specific circumstances. Also, they can help you develop a comprehensive financial plan, optimize your investment strategy, and provide expert insights. All these services can make you feel more confident about your financial future.
Ensure You Have Good Financial Health
If you’re in a dire situation now, it can be tough to envision excellent financial health. However, as long as you’re proactive and diligent, and follow your savings plan, you’ll be on your way to a brighter future.
Just remember that it’s a gradual process, and you won’t see immediate improvements. Stay focused and celebrate the small victories along the way, and you’ll find the motivation to stay on track.
To improve your financial well-being, you need to first get everything in order. Apply for a Kingcash loan now to get started. We have instant cash loans that’ll help out in a pinch.