Financial matters can be a major source of headaches, both figuratively and literally. The stress that comes from financial troubles can affect your physical health, family relationships, and ability to do your job.
While it鈥檚 true that there are people out there whose financial woes are self-inflicted, it is fair to say that money matters can give anyone a headache, even to the best of us.
Following a few common sense principles will help you avoid financial headaches and keep you out of trouble:
Keep track of your money This sounds obvious, but all too often we say, 鈥淲here did all my money go?鈥� If you find yourself saying this before your next paycheque, you are vulnerable to a financial migraine.
Balance In life and in finances, balance is essential. Enjoy the fruits of your labour but practice some restraint. If you earn $100 and only spend $90, you have just become $10 richer. On the other hand, if you earn $100 and spend $110, you have just become $10 poorer.
Keep things simple Do you have too many bank accounts, too many financial advisers, or loans at several different institutions? Do you have a hard time remembering where all your statements are? Do you know how many insurance policies you have, or do you even know whether you have any? Needless to say, simplicity is good and it will save you many headaches.
Borrow wisely. Don鈥檛 borrow money and have nothing to show for it. Not all debt is created equal. Generally, mortgages are good debt, because they enable you to acquire a home (you have to live somewhere right?) at a relatively low interest rate. Plus you have a long time to pay it off, and you can reasonably expect your home to increase in value over time. The same goes for investment loans.
Other debts are more toxic and should be avoided like the plague, or I should say, like the migraine. High interest consumer debt is generally expensive and should be treated with extreme caution.
Work smarter, not harder Working harder does not necessarily mean working better. Focus on what needs to be done and get it done.
Have a plan In financial planning, time is money. Do not postpone planning for your future. Waiting can be more costly than you think. In most cases you can make your finances healthier without having to earn more money. With the help of a professional, a little planning goes a long way.
Ivan Vazquez CFP, MBA is a Wealth Management Specialist with First Insurance Agencies and Mutual Funds Representative with Qtrade Asset Management Inc. To contact him, call 250-334-3443 or e-mail ivan.vazquez@firstins.ca.
