We would like to share some reflections and big-picture lessons from 2019 to help stay on target in the New Year.
Stick to the Balanced Portfolio Philosophy
One of the main reasons our clients know they can trust us is because we stick to our Balanced Portfolio Philosophy. Our Wealth Management Advisors apply this philosophy by creating plans that fit into your present and foreseeable financial situation, your income, your tax, insurance, and estate needs – all suited to personal risk guidelines.
One of the big lessons from 2019 is that it is never too soon to ensure that a portfolio is well set-up for the next economic downturn. Whether that means something on a personal level such as unexpected emergencies, or something societal like weak markets. Paying off debts and building savings can help relieve any unforeseen additional strain on one’s finances. In the meantime, our Wealth Management Advisors will continue to do their best to design custom portfolios that prepare you for any eventuality.
Conscious Spending
The tough reality of having to budget and save is that it means we must live within our means. This is something that, in a world of encouraged consumption, can be difficult to confront. One place to start is with the concept of conscious spending. The idea is to encourage oneself to think critically about all purchases and ensuring that if a purchase is needed, it is obtained at the best value.
Average household debt in Canada is 170% of disposable income, meaning that most Canadians spend much more than they make. We have reviewed paying down debt in the past; conscious spending, and thereby leaving as much as possible for savings and paying down debt, is among the most important tactics.
Conscious spending can be anything as small as preferred purchase of “on-sale” items, a critical examination of whether taking another short trip or vacation is absolutely necessary, or evaluating the option of skipping the purchase of expensive theatre/concert tickets for a while and would it be justified in the long run.
Though it is a personal decision how to follow a conscious spending path, it can be made simpler with the help of spreadsheets that one can follow over a period of time. Whichever tools one uses, they should fit into the conscious spender’s lifestyle, while helping to shave away excess expenses and focus where money is spent. Naturally, it is essential that the money saved by spending in this manner be directed toward paying off debt as soon as possible since interest on debt itself is a huge spending sinkhole.
Feel Good about your Finances with Non-Financial Goals
High levels of financial stress are abundant, especially toward the end of one year and into the next. As we are dependent on money, it is important to do as much planning as possible to avoid any added stress of unexpected costs. Budgeting and saving are the two simple and valuable ways to go about it. Fancy and complex strategies aside, it is essential that all of us budget and save so that we can be less worried about the future of our finances.
Beyond that, it is important to keep in mind why we want to save, why we want to retire comfortably, and what is our ultimate goal. Accumulating savings is not the end goal. Most people’s ultimate goal is being able to spend time with family and friends, to travel, and as long as their health allows that, to be able to support children and grandchildren without missing out on the freedoms that retirement can offer. It is extremely important to keep that goal in mind as we make our way into and through retirement. Navigating the financial world can be made a little easier and less stressful if we have the help of solid professional advice and if we find ways to remind ourselves that it will all be worth it at the end.