Winning the Financial Game

I was watching a program on television the other day that spoke of being successful in your financial life. The concepts were complex to me. I listened and watched but nothing seemed to make sense, so I thought I’d write this blog to help my clients work towards their financial successes.
Are you winning the game of financial success?
Like any sports game, to win the game, we need good defense and offense strategies. In finance, I would define defense as your spending habits and earning money as your offense.
Let’s start with a good defense.
• Know your expenses; understanding your expenses helps with preventing unexpected costs. Anticipate and save for expenses such as a new roof or the replacement of an old, used car. Create a budget.
• Share your goals with your family so they can help in reducing costs such as turning off the lights, not wasting food, walking instead of getting a ride to the corner, etc…
• Stay strong to your convictions of keeping your spending on track. Avoid unnecessary expenses such as, “Do you want to upsize the fries with that?”
• Pay attention to your bills to ensure there are no surprises such as unexplained fees, increase in rates without a new contract, and reduce or eliminate items you don’t need or want anymore.
• Take advantage of cost savings whenever possible such as coupons, waiting for sales, timing your expenses, reducing debt faster even for a couple of days.
With a good defense, we need a good offense.
• Find opportunities to earn extra money such as working overtime but save it or use the extra income to reduce debt. It’s nearly impossible to find an investment that will pay more than the interest rate of debt.
• Create passive income such as the following:
o Rental income from a house, a car, equipment, etc.
o Borrow money then lend it out at a higher interest rate
o Run a business and make it self-sufficient
o Get contracts and sub-contract the work
o Investment income such as GIC’s and mutual funds
• Invest in yourself such as schooling that will provide additional pay.
• Work another job but put the money to good use.
If you are working harder now than you did before to maintain your current lifestyle, I think it’s time to revisit your lifestyle choices. Brought to you by your friendly neighbourhood accountant.
Keep things simple