Five tips for financial success in 2021

CLEVE DeSOUSA

The old adage that if you watch your pennies, the dollars will take care of themselves is not only true, it also gives you a blueprint for a powerful cash management system.

Keeping an eye on every dollar is critical to cash management success. Use a budgeting tool to design how your money is allocated every month. If you don’t focus on the flow of your money, then you will keep suffering from the cash-sucking monsters that destroy your financial health.

Here are five tips for controlling cash flow and creating a healthy financial life.

Reserve your savings before paying bills
So you got your paycheck, paid all your bills, and bought all that you desired. Clearly, you are living a good life. But step back a moment and a different picture emerges. At the end of the month, all you have to show for your work is consumer goods, then not only are you missing out on the good life, you’re experiencing fiscal tragedy.

Unfortunately, this scenario is the reality for many of us. Fortunately, it’s easy to avoid.

The root cause is you failed to pay yourself first. The fix is to create a separate account and move your well-deserved compensation there before you pay any other bills. This discipline allows you to accumulate your hard-earned money and stops others from stealing it. Start with saving a percentage of your gross income that is comfortable. Set that money aside every month before you do anything else. Over time, gradually increase the percentage that goes to savings first. Most importantly, automate that deposit.

Automate everything possible
Enough is enough! When you set your budget, get with your financial institution and automate your routine minimum payments. This guarantees you pay your bills on time. The cost varies, but nearly every time you’re late on a payment, you pay an unnecessary fee. Late payments also damage your credit score, meaning you end up paying higher interest rates for years.

Again, the solution isn’t difficult. If you have bills that fluctuate, take the average and make that the automated amount. You can tap up as needed. Another tactic is to put money for automated bills in a separate account.

Whatever you do, do not ever pay a penny in monthly banking fees. Find a bank that offers accounts without fees.

Decide to stop accruing interest
Household debt in Canada is brushing $2 trillion and continues to climb. This way of life will be our demise. Unless you decide here and now to stop allowing banks and institutions to put their hands in your pockets and perpetually take your cash, you will continue to move further away from building real wealth.

Remember, nothing is free
So you think health care and corporate benefits are free? Wrong. Don’t take these plans for granted. You must know the provisions. What does your plan cover? When does it expire? Without that knowledge, you risk coverage running out just when you need it.

Schedule an appointment today with your company’s HR department to review your benefits. Make sure you’re taking full advantage of everything offered. Ask about flexible spending accounts. If they’re offered; they can reduce your tax burden. Before you end the appointment, ask your HR representative for a simple explanation of health care benefits and make sure you’re using every one.

Know-it-all’s never prosper
The moment you believe you know it all is the moment you stop learning and growing to achieve peak financial health. It’s okay. You don’t know it all. You are not supposed to. This is why you are reading this article right now.