Your resolution for 2024: Improve your finances!

It’s no secret that financial difficulties are a source of enormous stress for families who experience them. Numerous surveys each year report this. What we learn is that one of the main causes of stress is the inability to meet an unexpected expense. This is the case when you don’t have money set aside to be able to face one of these unforeseen events:

  • A sudden drop in income
  • A major repair
  • A new payment after the renewal of your mortgage, etc.

Every week in our offices, we meet people who are financially distressed and in 6 out of 10 cases, it is due to an unforeseen event that creates a significant budget crisis.

The domino effect of poor financial management

Often, one unfortunate event creates a domino effect. An example of this is increasing monthly payments on your variable rate mortgage. With a mortgage of $300,000, the difference can be as much as $700 per month!

In this situation, without an emergency fund or a pre-planned reduction in spending, it is almost impossible to keep all fixed expenses (mortgage, car payment, food, etc.) up to date and not to be late in paying our debts. In the case of a late payment of more than 30 days, it can leave traces in your credit file for… 6 long years! Since the factor that most affects your credit score is your payment habits, you can imagine the long-term effects on the quality of your credit file.

Once the damage is done, the options to get out of debt are more limited. For example, debt consolidation, either through a line of credit or a consolidation loan, becomes more difficult to obtain.

3 tips to improve your personal finances

To compensate for all the unforeseen events and their consequences, here is a list of 3 things to do in the new year to improve your personal finances:  

1. Build an emergency fund

By automatically setting aside an amount of money every week, no matter how small, you will learn to live without it. Your emergency fund will grow without much inconvenience. However, such as with a diet, it is better to set less ambitious goals but to pursue them over a longer period than to go with large deductions from your pay which leaves you no room for fun..

Once your emergency fund is well garnished, ideally the equivalent of 3 months of expenses, your acquired good saving habits can be used to save money for medium and long term goals such as a trip, renovations and possibly retirement.

Ask your payroll service if they can take a sum of money and put it into your savings account. Otherwise, program it yourself, via your financial institution’s banking APP., an automated and recurring transfer of a sum of money applicable on the day your pay is deposited.

2. Have a monthly budget

“We can never say it enough to our customers: the 1st tool anyone needs to successfully improve their finances is a realistic budget”, mentions Pierre Fortin, president and insolvency trustee at Jean Fortin & Associés. You can use this complete budget tool that will allow you to know where your money is going. You can then ask yourself if savings are possible. In general, you will find that small cuts here and there are always possible.

3. Be aware of what you owe

“In order to be able to improve your finances, it is important to know not only the amount that you owe but also the interest rate, the monthly payment and how long it will take you to reimburse each debt”, says Pierre Fortin. Once you have a clear picture of your debts, you will then be better equipped to calculate your debt ratio online.

Do not hesitate to consult a professional

If your finances are bothering you, if you need help completing these 3 tips, you are struggling to repay your debts or you simply want to get advice from a professional, you can speak with your financial institution, your financial planner or a personal finance advisor from Jean Fortin.

In conclusion, generally, you do not have control over your income but you do have control over some of your expenses. Making a budget, listing your debts and calculating your debt ratio may seem a little complicated at first glance, but it’s simpler than you think. With a little bit of work and small sacrifices can pay off big in the long-run. Peace of mind is priceless!

That being said, know that you can always count on our financial advisors for advice by telephone, videoconference or in person. It’s free, confidential and without obligations.

Jean Fortin & Associés
Personal finance advisor
Licensed Insolvency Trustee