Be financially ready to buy your home
For most of us, we learned how to handle money the moment we were given our first lunch money or school allowance. Back then, the only thing we needed to worry about was how to buy all the food we wanted with the few dollars we had in our pockets. Little did we know it then but that was actually our first learning experience with setting our own budget. As the years went by, we eventually learned how to budget not only for our lunch but also for bigger things like school tuition, car payments, credit card bills, and household expenses.
On Your Own
Moving out of your parents' home and into your own little apartment or startup house is a huge change, not only psychologically and emotionally but financially as well. Gone are the days when you did not have to worry about paying for electricity, heat, and other utility bills. Once you signed that lease to your own home, all those household expenses became a part of your responsibility as a homeowner and as an adult.
Have a Plan
When you live in your own home or are supporting a family, you need to have an efficient money management plan that takes into consideration all the expenses of every member of the family, as well as the home-related expenses. One important element to consider when creating a household budget is the amount of mortgage and taxes you are supposed to be paying each month. You have to make sure you pay these on time in order to avoid any future financial fiascos. If you are living with other income-earning members of your household, it is a good idea if you can pool your resources in paying for these expenses. If you live in an apartment or rented condominium, the monthly payments tend be much lower since you won't be paying for the mortgage. However, you still have to take your rent into consideration when planning your household's monthly budget. You certainly wouldn't want to get evicted for not being able to pay the rent on time. Once you have settled all the house payments, the second most important priority is to budget for food. Obviously, food is a basic necessity that everyone in your household needs but you should still have a limit as to how much you should be buying every week and what kinds of foods to bring into the house. This is especially important if you have kids in the house who have a tendency to spend on unhealthy and unnecessary junk foods. Utilities such as electricity and water are considered to be among the basic needs in today's society. You should certainly consider them when planning your household budget. If you live in a place with a colder climate, you should also include the heat and gas bills in your monthly budget. In planning your family or household's budget, you should never forget to allot a certain amount to be used for future expenses or any kind of emergency.
When unexpected events arise and you need to spend money, it is always helpful to have deep coffers to dig in and pull out the necessary funds to tide you over. A good rule of thumb for saving is to allot 10% of your gross income to savings. The first few times you take this out of your disposable income may be a bit uncomfortable, but after that you will soon forget and it will be like you didn't ever have that money to begin with.
Get Your Money Working Harder
Research banks to find out which one will give you the highest interest for the least amount of fees, and talk to an advisor about investment options like RRSP's and TFSA's.
Andrew W Bradley is a licensed Insurance Broker and Financial Services Advisor helping Orleans families since 2011. Combining this with his previous working experience with the Canada Revenue Agency enables him to help a wide range of individuals, families and businesses. As an Independent Broker he devotes time to educating the consumer and implementing comprehensive financial plans for both individuals and businesses in areas including insurance and investments.
The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. I recommend that you obtain your own independent professional advice (preferably me) before making any decision in relation to your particular requirements or circumstances.