It’s mid-January, and if you’re like most Canadians, you’ve probably already broken at least one New Year’s resolution. Don’t feel bad – people typically slip up within the first few weeks, and that includes financial resolutions.
It’s easy to miss goals if you’re not making them SMART, which stands for specific, measurable, achievable, relevant, and time-bound, which gives you a sense of direction when making and sticking to your goals. Here’s how to make your money resolutions stick.
Shop around for better financial products
We’re all creatures of habit and it’s easy for us to stick to what we know. However, when it comes to our financial products, shopping around can be worth our time. First off, decide what products you want to look at. For example, there are plenty of credit card options out there, does your card still make sense for your needs? It’s easy to figure out what’s best for you by using a credit card comparison tool. Just put in your information, and it’ll only take a few seconds to determine which card is best for you based on your spending habits and the type of rewards you prefer.
Now some of you may think all credit cards are the same, but it really comes down to the rewards. If you’re paying your rent via credit card every month, wouldn’t you want to earn some travel or cash-back rewards while doing it? No two credit cards are the same, which is why you should compare and see what’s available to you.
Consolidate your debt
If you carry a lot of consumer debt, it will likely be worth your while to consolidate everything by transferring outstanding balances to a low-interest credit card. Many of these credit cards allow you to balance transfer at rates as low as 0%. You could literally pay off your debts interest-free, but keep in mind that would only be a set period of time depending on what the promotion is (usually six to 12 months).
Rewards credit cards typically have an interest rate hovering around 19.99% for purchases, whereas the best low interest credit cards have rates of less than 10%. You’d instantly be paying 50% less interest just by switching cards.
By consolidating your debt, you pay less interest in the long term. Plus, your debt becomes a lot easier to manage when you’re only paying one source. This is especially important if you ever plan on becoming a homeowner in the future as lenders will factor in how much debt you currently have when determining how much of a mortgage you qualify for.
Save more money
Here’s a resolution that’s a bit open ended. Technically speaking, if you save just $1 more, you’ve met your New Year’s resolution, but is that all you’re striving to achieve? If you apply SMART goals, you can up your savings rate quick. Start setting aside an additional $25 a month towards savings – surely you can come up with that amount, right? To make it achievable, set up an automatic transfer to your savings account so you never need to worry about it. Alternatively, use that money for a specific goal such as a vacation or retirement savings, which makes your goal relevant. As the months pass, try to increase the amount saved so you have more money at the end of the year. The idea is to get you to keep saving which only helps you in the long run.
The bottom line
Money resolutions are easier than you realize if you stick to SMART goals. That being said, things happen, so don’t get too upset if you don’t reach one of your goals. Take things slow and build towards your long-term plans.
Ratehub.ca empowers Canadians to search smarter and save money by comparing mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance.