When it comes to personal finances, good money management and proper spending control will give you peace of mind. There are several important points to consider when successfully tackling your debt and improving your financial health. Here are a few that we believe are important.
1. Protect yourself against the hazards of life.
When you’re young and healthy, you don’t usually think about situations that could cause you to lose your independence and jeopardize your ability to earn an income and maintain your daily life. However, no one is immune to illness or accidents. Without protection against these events, you can quickly find yourself in debt. This protection can take the form of disability insurance or an emergency fund, ideally a combination of the two. The emergency fund could be used to cover unexpected expenses in the early days while you file a claim with your insurer. Subsequently, the amounts paid by the insurer can be used to replace your income, in part or in full, depending on the terms of the contract, allowing you to focus your efforts on regaining your health. If you are employed, your employer may offer short- and long-term disability insurance. Take the time to assess whether the proposed coverage is suitable for your situation and take out additional insurance if necessary.
It is also important to have sufficient life insurance, a will, and a power of attorney for your health care and finances. This is especially important to ensure that, in the event of death or major incapacity, your wishes are respected and your loved ones are not left destitute.
2. Live within your means.
Living paycheck to paycheck is becoming increasingly common these days. While this practice is widespread, it’s still risky because, as mentioned in the previous point, when a major unforeseen event occurs, you risk going into debt and deteriorating your financial health, among other things.
Living within your means means considering your income to plan your expenses Setting up a budget and updating it regularly helps ensure you don’t lose control of your finances. An automatic savings program is also a good way to put money aside for later without having to think about it every day.
3. Pay your debts.
Most consumer loans come with sometimes very high interest rates. Credit cards,or example, usually offer interest rates of around 19%, and can sometimes be as high as 29.99%. Additionally, the balance is payable in 21 days. Implementing a debt payment strategy, starting with those with the lowest balance, is often recommended. By doing so, you can enjoy the gratification of seeing your first debt paid off and give yourself the motivation to keep going.
4. Pay attention to sales contracts.
We already talked about installment sales in a previous article. Remember that before signing a sales contract, you should take the time to read the terms of the contract. Pay attention to the “fine print.” They often contain contract breach penalties and other conditions that could cost you dearly if you’re not prepared.
5. Meet a professional.
If you’re in debt, it’s a good idea to consult a financial recovery advisor before things get worse. At Roy Métivier Roberge, we’re here for you first and foremost. Book an appointment now.
