Financial resolutions worth making in the new year
How to prioritize your financial health in 2022
“In 2021, 38 percent of Canadians considered money to be their number one cause of stress.”
It’s a new year and you know what that means — it’s resolution time! When considering New Year’s resolutions, diet and exercise typically spring to mind, but did you know that there’s another form of health and wellness you may be overlooking? Your financial health.
In 2021, 38 percent of Canadians considered money to be their number one cause of stress according to a survey conducted by FP Canada. In fact, financial concerns outranked personal health, work and relationships.
If 2022 is your year to focus on improving your overall health, addressing your finances may just be the most transformative resolution you can make. Here are four ways to sustainably improve your financial health:
1. Set SMART goals and visualize their outcome
Setting goals based on pie-in-the-sky daydreaming can lead to disappointment. When it comes to financial planning, setting SMART goals can help you define what’s realistic and attainable..
SMART stands for: Specific, Measurable, Achievable, Relevant and Time-Bound. Here’s an example: For the next 30 days, I’ll track my spending to identify where I can cut back and start saving money month over month.
Once, you have your SMART goal, visualize what the outcome could be. In the above example, the money saved could go towards an annual vacation in the sun or the down payment on that vehicle you’ve had your eye on.
2. Be mindful when making financial decisions
When it comes to spending, there’s definitely a difference between a want and a need. But that doesn’t mean you can’t have both. That’s where a budget comes in. A budget helps you to be mindful with your day-to-day and month-to-month spending habits.
If you’re new to budgeting, try the 50/20/30 rule. It works like this: 50 percent of your after-tax income goes to needs – rent payments, mortgage payments, groceries, debt servicing, insurance, utilities, car payments, etc. Wants, such as entertainment, dining out, electronics, fancy clothes and other non-essentials should account for 30 percent of your income. Finally, the remaining 20 percent of your income goes to savings, which includes long or short-term savings, investments and paying down extra on debts.
Obviously, the portion of your income that goes into the needs category will vary, depending on your earnings. Set up your ‘buckets’ to fit your financial situation and be consistent every month.
3. Take small steps and don’t give up
Martin Luther King Jr. once said, “You don't have to see the whole staircase, just take the first step.” This sentiment can apply to many resolutions, including money matters. What’s most important is that you’ve made the decision to prioritize your financial health and make meaningful changes.
From budgeting to goal setting to brushing up your financial literacy, there are a lot of facets to money management and there isn’t a one-size-fits-all approach. Do some research to discover what aligns with your thought processes and lifestyle.
And when things inevitably don’t go as planned — don’t give up. Any resolution worth making is going to take effort to truly see the benefits.
4. Talk to a financial expert
Whatever your financial health resolutions are, remember that you’re not alone. Our financial experts are here for you and happy to provide guidance along your journey. Together, let’s make a plan to support your 2022 financial goals — and build healthy habits to carry with you beyond this new year.
