By Melissa Cassar
At this time of year, many people pause to reflect on what they'd like to change about their lives going forward: lose a few pounds, take a class, spend more time with the kids. Often, these goals revolve around personal finances.
But if you've been battered by economic forces beyond your control, it may be tough to craft financial resolutions ambitious enough to have an impact on your situation, especially if you fear that unforeseen obstacles may later force you to scale them back or even lose ground.
That's why I urge taking baby steps 鈥� setting small, meaningful objectives that provide a sense of accomplishment and that you can ramp up when your situation improves. Here are a few examples:
Scale back expenses. If you can't make a big dent in your monthly costs, like refinancing your mortgage or selling an unneeded vehicle to eliminate a car payment, look for little dents that can add up:
鈥� Save $10 a week by having one less fast food meal and to-go coffee, or rent a DVD instead of going out to the movies. That might save about $500 a year.
鈥� Lower the thermostat in the winter by one degree and save three to five per cent on your utility bill. Saving five dollars a month equals $60 a year.
鈥� Shop around for better home and car insurance rates, and consider raising low deductibles. Just make sure your coverage has kept pace with inflation.
鈥� Balance your cheque book. Even though many banks have lowered fees for bounced cheques and overdrafts, one a month at roughly $25 a pop adds up to $300 a year.
Build an emergency fund. Financial experts usually recommend stowing three to six months' expenses in an emergency fund. That's a good long-term goal, but if it's not realistic don't simply give up without trying 鈥� stash some of the cash you're saving above, a few dollars each month. You won't miss it and might just be saved from having to take out an expensive short-term loan to cover emergency car repairs or an overdue electric bill.
Get organized. Even if you can't afford to pay off all bills in full each month, at least know where you stand regarding due dates, minimum payments due and credit limits so you don't inadvertently rack up higher interest rates or damage your credit score. If you're a chronic procrastinator, set up automatic bill payment with your bank. It will save on postage as well.
Stick to your budget. If you don't have a budget, make this the year you create one. Numerous online tools are available to help. For example, Practical Money Skills Canada, Visa Canada's free personal financial management program (http://www.practicalmoneyskills.ca/personalfinance/savingspending/budgeting/), features budgeting worksheets and calculators, guidelines for living within your means, budgeting recommendations for back-to-school, holiday spending, travel and more.
Melissa Cassar directs Visa's financial education programs in Canada. Follow her at www.twitter.com/MoneySkillsCA.
