3 DON’TS
OF PERSONAL FINANCES

Big or small paycheck: won’t matter much if you don’t do what’s right.

DON’T N.º 1 – NOT HAVING A BUDGET

Without a clear and detailed budget, it is easy to lose sight of where your resources are flowing and what your spending habits really look like. It’s like driving blindfolded.

No budget means you won’t be able to make a sound tax planning, set your financial goals, discover risk areas or the sneaky unnecessary expenses that are slowly eroding your hard-earned money.

What to do:

Identify last month’s expenses, then go back 3 and 6 months to finally get the whole year. Try to be as precise as possible using support documentation like bank statements, receipts, invoices, etc. If you are not already doing it, start keeping your receipts and proof of purchase documents.

💡 Pro tip: Categorize your expenses in regular, fluctuating, occasional, etc. and classify each category: rent, transport, restaurants, groceries, recreation, shopping… do you see a spending pattern?

DON’T N.º 2 — NOT HAVING AN EMERGENCY FUND

The death of the family’s main breadwinner, unexpected medical expenses due to a critical illness or loosing your job are some of the events that can lead to personal bankruptcy. Your financial future could be at risk if you do not have some kind of protection to counteract the effects of a catastrophic life event.

What to do:

Make a list of all the protection you have like group insurance, government programs, a savings account, etc. to identify the resources you can count on in case an unfortunate life event hits you.

💡 Pro tip: Calculate the amount you would need to cover your living expenses for 3 to 6 months in case you lose your income. Start an emergency fund in a tax-free savings account with the option of automatic deposits.

DON’T N.º 3 —LET TIME GO BY

If you decide to shop for insurance when you are 40, you will be at risk of having fewer options, more expensive or limited. Likewise, the more you let time pass by to start saving, the more you lose the benefits of compound interests that optimize investment growth.

What to do:

Reduce financial risks with a life insurance policy -that includes a rider for critical illness- and a disability insurance policy, especially if you are an independent professional or entrepreneur. You should also start your RESP savings account as soon as possible.

💡 Pro tip: Maximize registered accounts to benefit from the tax advantages they offer. Diversify your portfolios to increase growth opportunities.

DON’T WAIT UNTIL IS TOO LATE

These don’ts are more common than you think. So don’t feel bad if you check all the boxes. What matters is that you take charge of your finances today. Start by getting advice from a qualified professional.

Contact a financial security advisor that will help you put in place the DO’s your case requires. The sooner you act, the faster you can course-correct and be prepared.