Updated: Feb 10, 2021
HOW TO EVALUATE AND IMPROVE YOUR FINANCIAL HEALTH
Whether you’re a prospective homebuyer or an existing homeowner already paying down a mortgage, ensuring your finances are in good order is crucial for your overall financial health.
With tax/RRSP season just around the corner, now is a great time to review your current financial plan to identify potential improvements.
This could mean relatively small changes that could improve your credit score—which could get you access to better interest rates. Or it could involve something more significant, like refinancing your mortgage to rid yourself of high-interest debt once and for all.
Managing one’s financial health remains as important as ever. Money issues continue to be the number one cause of stress for four out of 10 Canadians, according to the latest FP Canada Financial Stress Index.
Furthermore, nearly half of Canadians aren’t confident they’ll be able to cover their family and living expenses this year without going into further debt, according to the recently released MNP Consumer Debt Index.
how to Improve Your Financial Health
So, what can you do to improve your finances? Here are just a few tips…
Have an Emergency Fund
Expect the unexpected by having easily accessible funds on hand to cover those surprise expenses. Whether it’s medical costs related to disability or an emergency home or car repair, having funds set aside means you won’t need to go into debt to cover the costs.
Automate Your Savings
While it’s important to take care of your debt, it’s also important to build up your savings, whether for retirement or investing purposes. The easiest way to put that money aside is to automate the process. Have a set amount withdrawn from your account—coinciding with your pay—that will go directly into your RRSP or Tax-Free Savings Account (TFSA). Small but regular contributions can add up to large savings over time.
Know Your Credit Score
It’s easier to improve your credit score if you know exactly what’s weighing it down. Both TransUnion and Equifax Canada offer credit report-monitoring services that notify you of any changes to your score, as well as a summary of the factors negatively impacting that score.
Prioritize Paying Off High-Interest Debt
Credit card debt incurring interest rates of up to 29% is one of the most destructive factors impacting personal finance out there. Paying off this debt should be a priority. If the amount is insurmountable, consider consolidating that high-interest debt and shifting it to a lower-interest account, or we can look into seeing if you qualify to roll it into your mortgage by refinancing.
Speak to a Professional to Understand Your Options
As a mortgage professional, I offer advice on mortgages. Financial advisors offer advice on finances and can be invaluable in getting you back on the path to financial freedom.
Knowing how to start the journey of improving your finances can be overwhelming. But oftentimes there are solutions that may not be obvious.
Everyone’s financial and personal situations are different and there’s no one-size-fits-all solution. This is especially true for mortgage refinancing.
If you need assistance, feel free to reach out so we can discuss the options available to you. Should that include seeking help from a financial advisor, I would be happy to make a recommendation/introduction.