D Smith: Stick to a financial plan

Having a financial plan in your life is the key to financial success in investing, saving and management of debt.

Having a financial plan in your life is the key to financial success in investing, saving and management of debt.

Many people do not feel in control of their own financial destiny. Fiscal responsibility leads to financial security.

Sticking to a financial plan is similar to sticking to a diet. Not much fun some days. This may seem like a lot of work, with little immediate reward on a day by day basis. You don’t want to worry about money all the time.

When people overspend, frustration can become a reality. A cycle of overspending and remorse can cause excessive stress that affects day to day health.

You have to set realistic goals and take it one day at a time.

A financial plan involves many components. Goals must be set and realistically followed.

A financial plan works if recommendations form part of an action plan.

Review your progress and make necessary changes to adjust your personal financial plan if necessary.

Credit card debt, mortgage debt, consumer debt, needs and wants, each component has a priority in a plan.

Consolidating debt can be a start to avoiding excessive interest rate costs.

With a home equity line of credit, you can borrow money at about three per cent annual interest costs, instead of paying 18 per cent or higher interest costs on credit card debt.

Getting organized and tracking all of your spending is a must for people serious about finding out where the money goes.

Tracking expenses is important for all family members to take part in.

Write down where the money goes. If you don’t write it down, you will not remember a week from now where your hard earned money went.

Excessive shopping or eating out too much can derail a well-planned financial plan.

Buying a coffee twice a day or lunch out three times a week can add up to thousands of dollars each year.

Need and want are two very different emotions when shopping.

Need can be associated with a purchase of food that is required to feed our family, while want can be associated with buying a new outfit that we do not really need.

Avoid impulse shopping. If you see something you want, walk out of the store, go home and think about it.

This is called a cooling off period. This will allow you some time to ask yourself if the purchase is a need or a want.

Check the store’s return policy before you make your purchase.

Make sure you deal with a store with a refund policy.

If you have buyer’s remorse, you can return the item and get your money refunded.

Determine how much net income you have available to spend weekly or monthly.

You need to break down your expenses under the category of needs and wants.

Costs to maintain your home, example mortgage payments or rent, and utility costs should be priorities before take out food.

If frustration over finances is part of your life on a regular basis, take control. You are responsible for your financial security.

Doreen Smith is a certified financial planner with Capri Wealth Management and Manulife Securities Investment Services Inc. The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Investment Services Inc.

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