Are you working hard from 9 to 5 yet finding that you spend your money faster than you’re making it? We talked to Elizabeth Liu, a registered Mutual Fund Representative with Desjardins Financial Security Investments Inc., to find out what women can do to get their finances on the right track. Read on for five essential tips that will get you making smart moves with your money.
1. Pay yourself first
An excellent way to increase savings and investments is to set money aside immediately before it’s used for any other purpose. Paying yourself first means committing a portion of your regular paycheque to savings before meeting any other financial obligations. This is something Liu recommends to every one of her clients, particularly to young women who are just starting out on their own. “It’s a simple way to boost your savings,” says Liu. Most financial institutions offer pre-authorized contribution (PAC) investment plans. A set amount of money that you decide upon will be automatically deducted from your bank account on a regular basis and then transferred into mutual funds, common stocks or other investments. Liu suggests starting with a PAC of at least 10% of your net pay, or if not possible, try 5%. “Once the PAC has been set up, you’ll barely even notice that you’re doing it.”
2. Set goals
It’s important to set both long-term and short-term money-saving goals. “It’s always a good idea to have a clear picture of what it is you’re saving for,” says Liu. Revisit your goals every three or six months to see how close you are to achieving them. If you find yourself having trouble with meeting your goals, consider adjusting them or talking to a financial advisor.
3. Educate Yourself
Liu has had many female clients who drew blank stares the minute she used the terms “capital gain” or “dividends”. As with anything else in life that intimidates you, the best way to overcome your fear of financial jargon is to educate yourself. Many financial institutions host free seminars on financial planning. “Attending a seminar is a great way of familiarizing yourself with the basics of financial planning,” recommends Liu. “You’ll then be able to make informed decisions on how to save your money and get it to start working for you.” And by the way, “capital gain” is a profit that results from the appreciation of an asset such as stocks or bonds over its purchase price, and “dividends” are payments made by a company to its shareholders—in case you were wondering.
4. Pay down credit card debt
Credit card debt is the worst kind of debt a person can incur. Credit card companies charge exorbitantly high interest rates that can be anywhere between 17% and 22% or higher even. Be vigilant about living life more frugally in order to pay down your debt. Start bringing your lunch to work. Skip the morning venti at Starbucks and brew coffee from home. Brown-bagging your lunch may not be the most glamorous thing but neither is turning into a bag lady because of your credit card debt. “You’ll be amazed at how much you’re saving once you’ve scrutinized your every spending habit and slashed unnecessary expenses,” says Liu. If your credit card debt is really bad, seek help by getting a bill consolidation loan through your bank or going to a credit card counselling service.
5. Consult a pro
Talk to a financial advisor about what your goals are and she’ll be able to provide you with sound advice on how to achieve them. Don’t know where to start? Visit your bank branch and make an appointment with a financial advisor or better yet, get referrals from a girlfriend or female co-worker whose financial situation you admire. A professional can set you on the right path to meeting your financial goals since they’ll be able to assist you with tailoring a savings plan that is specific to your needs.
1. Pay yourself first
An excellent way to increase savings and investments is to set money aside immediately before it’s used for any other purpose. Paying yourself first means committing a portion of your regular paycheque to savings before meeting any other financial obligations. This is something Liu recommends to every one of her clients, particularly to young women who are just starting out on their own. “It’s a simple way to boost your savings,” says Liu. Most financial institutions offer pre-authorized contribution (PAC) investment plans. A set amount of money that you decide upon will be automatically deducted from your bank account on a regular basis and then transferred into mutual funds, common stocks or other investments. Liu suggests starting with a PAC of at least 10% of your net pay, or if not possible, try 5%. “Once the PAC has been set up, you’ll barely even notice that you’re doing it.”
2. Set goals
It’s important to set both long-term and short-term money-saving goals. “It’s always a good idea to have a clear picture of what it is you’re saving for,” says Liu. Revisit your goals every three or six months to see how close you are to achieving them. If you find yourself having trouble with meeting your goals, consider adjusting them or talking to a financial advisor.
3. Educate Yourself
Liu has had many female clients who drew blank stares the minute she used the terms “capital gain” or “dividends”. As with anything else in life that intimidates you, the best way to overcome your fear of financial jargon is to educate yourself. Many financial institutions host free seminars on financial planning. “Attending a seminar is a great way of familiarizing yourself with the basics of financial planning,” recommends Liu. “You’ll then be able to make informed decisions on how to save your money and get it to start working for you.” And by the way, “capital gain” is a profit that results from the appreciation of an asset such as stocks or bonds over its purchase price, and “dividends” are payments made by a company to its shareholders—in case you were wondering.
4. Pay down credit card debt
Credit card debt is the worst kind of debt a person can incur. Credit card companies charge exorbitantly high interest rates that can be anywhere between 17% and 22% or higher even. Be vigilant about living life more frugally in order to pay down your debt. Start bringing your lunch to work. Skip the morning venti at Starbucks and brew coffee from home. Brown-bagging your lunch may not be the most glamorous thing but neither is turning into a bag lady because of your credit card debt. “You’ll be amazed at how much you’re saving once you’ve scrutinized your every spending habit and slashed unnecessary expenses,” says Liu. If your credit card debt is really bad, seek help by getting a bill consolidation loan through your bank or going to a credit card counselling service.
5. Consult a pro
Talk to a financial advisor about what your goals are and she’ll be able to provide you with sound advice on how to achieve them. Don’t know where to start? Visit your bank branch and make an appointment with a financial advisor or better yet, get referrals from a girlfriend or female co-worker whose financial situation you admire. A professional can set you on the right path to meeting your financial goals since they’ll be able to assist you with tailoring a savings plan that is specific to your needs.
