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Tips for Good Financial Health

According to the report from the Angus Reid Institute released in July of 2018, 21 per cent of respondents said they can't afford to go for dental care, while one quarter reported they have recently had to borrow money to buy groceries.[1]  Financial problems may be affecting more than just your credit score. The chronic stress that comes from worrying about money can also have a negative impact on health.

Financial stresses have been linked to migraines, cardiovascular disease, absences from work, insomnia, depression and other mood disorders.[2]

Although wealth isn’t going to guarantee good health, knowing how to create and stick to a budget and understanding how credit works can help you manage your finances and the stress that goes along with them. To help you get started on your path to reducing your financial stress, here are six money management tips.

Create a Financial Calendar: Don’t get blind-sided by annual or periodic payments.  Log all your bills in your phones calendar with a reminder or go old school and write them in a planner or on a wall calendar that you can check in with regularly to ensure you’re on top of all your important payments.

Track Your Net Worth: Your net worth is a big-picture number that can tell you where you stand financially. You can determine your net worth by subtracting your debts from your assets. This will help you see at a glance the progress you are making on your financial goals.

Build a Budget: Start by creating an income statement where you write down how much money you receive from your salary, bonuses, benefits, reimbursements and other sources, then compare that to all of your expenses to ensure you have enough money to cover everything you need. From here, you can break this down into a budget for a smaller timeframe (two-week or one-month period) to help make money management easier.

Pay Yourself First: It is important to include savings in your budget. It is recommended that you set aside 10 per cent of your income for savings and dedicate at least another 10 per cent to debt repayment (if applicable) on top of the other payments. This will help you stay financially free when unexpected expenses come up.

Prioritize Your Debt: Take a look at your interest rates for any loans and credit cards you are carrying a balance on. Prioritize your repayment plan based on which debt has the highest interest rate. Apply the extra 10 per cent of your income set aside for debt repayment to your highest priority until it is paid off. Once that debt is eliminated, take the minimum payment from that debt and add it to the 10 per cent of your income you are applying to debt. Apply the new sum to your next highest priority debt until it is eliminated and continue in this fashion. This will help you eliminate your debts faster and reduce the amount of interest you are paying.

Pull Your Credit Report: Use services like CreditKarma or Borrowell to pull your monthly credit report. This will help you to monitor your financial health score as well as allow you to spot any credit activity in your name that you were unaware of.

If you have been suffering from chronic financial stress, check out our blog on seven ways to reduce your stress levels.

 

References:

1. Angus Reid Institute. "The Poverty Project." Angus Reid Institute, July 2018, angusreid.org/ari-poverty-study. Accessed 23 Dec. 2018.

2. Sweet, E. The High Price of Debt: Household financial debt and its impact on mental and physical health. SocSci Med. 2013 Aug; 91: 94–100.Published online 2013 May 16. doi: 10.1016/j.socscimed.2013.05.009