Financial resiliency is your ability to make it through the tough times. I have a few tips to help you better understand your financial picture, so you can build a plan to support you during financial hardships.
Check Your Credit Report
Your credit report will list all the credit tools that you. You can review the balance and payment history to see if you have any late or missed payments, which will show you where you need to focus your financial efforts, i.e., budgeting.
My number one tip is to not miss or skip bill payments. Make sure you are paying bills on time, even if it’s just the minimum payment.
Purchase Life Insurance
If you have anyone that depends on you financially, life insurance is a good investment. For younger adults, life insurance may be even more important because you likely haven’t amassed enough savings to cover future expenses, like your child’s education, your burial or funeral costs, etc.
If you’ve already purchased life insurance, make sure they are still the right kind of insurance for your situation and provide enough coverage for your outstanding debts.
Using Your Upcoming Tax Return Wisely
Contribute to your RRSP: Take advantage of compound interest and lower your taxable income. By contributing more to your RRSP, you can bring down your gross income and possibly have a tax return the following year.
Contribute to your savings or TFSA: Do you have an emergency fund? Putting your tax return into a TFSA is a great way to take advantage of this money later, tax free.
Pay off your debt: If you’re carrying a high credit card balance, dedicate your refund to paying those balances down instead of paying into savings or RRSPs. This will save you hundreds of dollars on high-interest costs and get your balances down, faster.
Add a prepayment to your mortgage: Adding an additional payment to your mortgage will reduce your amortization period and interest costs. Even a small sum can save have a huge impact on reducing your total interest costs.
Bonus tip! When you’re thinking of making a big purchase, like buying a car, reach out to a mortgage broker, especially if you’re thinking of buying or refinancing in the next few years. As a mortgage broker, I can help you understand what impact this car payment will have on your future financial picture and purchasing power.