**This is a sponsored post written by me in collaboration with Capital One Canada. All opinions are my own
Many people make New Year’s Financial Resolutions. Who doesn’t want to save more and spend less money, right? The problem is that sticking to your financial goals is a lot harder than making them. If you’re ready to make meaningful changes that will set you up for the long run, consider the following 10 New Year’s Financial Resolutions.
Focusing on high-interest debt, such as credit card debt, is one sure way to improve your financial health. That’s because it’s hard to get ahead if you’re paying 20%+ interest. One of the best strategies to reduce debt is to apply for a line of credit with your financial institution. These types of loans come with a much lower interest rate. If approved, you can use that loan to immediately pay off your other balances. Now you only have a single loan to worry about, which will significantly improve your financial life.
With inflation near all-time highs, it’s becoming harder to save money, but here’s one easy strategy: set up a monthly automatic transfer to your savings account. By doing this, you’re always paying yourself first. It doesn’t have to be a huge amount to begin with. Start with something small, like $25 per month. The idea here is that you won’t even notice the money missing. As time passes, keep upping the monthly amount you’re setting aside. You’d be surprised at how quickly you can save.
Improve your financial literacy
Improving your financial knowledge can be easy with online resources. One great resource is Capital One Canada’s Life and Credit blog – it’s filled with tons of tips and tools to guide you along your financial journey. These blog articles cover a wide range of topics, from what credit card fees are to how to protect yourself from credit card fraud. Each post is easy to digest and is relatable regardless of how old you are or what your financial standing is.
Saving for an emergency fund is one of the most popular New Year’s financial resolutions. As a great rule of thumb, you should try to have an emergency fund that covers six months’ worth of living expenses (rent, mortgage payments, utilities, food, etc.). As the name implies, you would use this money in an emergency, such as a job loss, major car repairs, or medical issues. While there’s no denying that six months’ worth of expenses is a lot, think back to tip #1. Start small. The money you’re setting aside will help you out if any unexpected expenses come up.
Spending less money is one of the more common financial New Year’s resolutions, but it’s easier said than done. Especially when the costs of gas and groceries have gone up. To help you keep your costs down, start by making an updated budget. Track all your expenses for a month or two to get an accurate view of your spending habits. With this information in hand, you can quickly see which areas could use some improvement. It could be something as simple as renegotiating your cell phone bill or cutting your entertainment expenses and subscription services.
Your credit score is a number between 300 and 900. The higher your number, the more creditworthy you are. This is important if you ever need a loan in the future. To improve your credit score, you need to know where you stand first. Credit Keeper from Capital One Canada is a free service that allows you to check your credit score even if you’re not a Capital One customer. Checking your score through Credit Keeper won’t hurt your score and is a safe and secure service that allows you to stay on top of your credit. Paying your bills on time and reducing your debt are two things you can do that could help you improve your credit score.
Spending money has never been easier since you can do it with a quick tap directly from your phone. To cut back on impulse purchases, you’ll need to set some rules for yourself. For example, you could tell yourself that you won’t make non-essential purchases of $50 or more without waiting 48 hours. If after that time passes, and you still want the item, then go ahead and buy it. That said, the odds are you’ll realize that it’s something you don’t need, and you won’t want it anymore.
It’s always a good idea to go through your wallet to see what credit cards you have. You might realize that you have cards you no longer need. At the same time, it’s worth shopping around to see if different credit cards would be better suited for you. If you’re interested in a Capital One credit card, be sure to use Quick Check, an online credit card eligibility checker from Capital One Canada, to find out which one of their credit card(s) you’ll be approved for, before you apply. Quick Check is free for all Canadians and has no impact on your credit score.
Buying a home is one of the most common New Year’s Financial Resolutions that are broken. That’s because buying a home is a substantial financial commitment that isn’t quickly done. Instead of telling yourself that you want to buy a home, focus on something more realistic such as saving a 5% down payment.
Most people have a chequing and savings account, but if you want to get serious about your money, it’s time to open a Registered Retirement Savings Account (RRSP) or Tax-Free Savings Account (TFSA). RRSPs are designed for retirement savings. You get an immediate tax break on contributions, but you’ll have to pay taxes when you eventually withdraw the funds in retirement. With your TFSA, you don’t get an immediate tax break, but all interest and capital gains made within the account are tax-free. This makes your TFSA an ideal account for both short-term and long-term goals.