9 Smart Things You Can Do for Your Finances and Financial IQ

Have you ever wondered what smart things you can do for your finances? I mean, from buying your first car or house to saving for retirement, there are several milestones to save money for in the future. How can you tackle it all?

And just as importantly, where do you start?

The good news is, making smart money moves is easier than you may think. You don’t need a higher-paying job or a windfall from a relative to improve your personal finances. For many people, better money management is all it takes to reduce their spending, improve their ability to invest and save and achieve the financial goals that once seemed impossible.

But even if you feel like your finances are stuck in a bad place with no way out, there are a number of things you can do to create a better situation for yourself. Here are some to get you started.

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Smart Things You Can Do for Your Finances To Boost Your Financial Prowess

1. Track your spending to improve your finances

If you don’t know what and where you’re spending each month, there’s a good chance your personal spending habits have room for improvement.

Better money management starts with spending awareness. Use a money management app like MoneyTrack to track spending across categories, and see for yourself how much you’re spending on non-essentials such as dining, entertainment, and even that daily coffee. Once you’ve educated yourself on these habits, you can make a plan to improve.

2. Create a realistic monthly budget

If you are spending more than you earn, you will never get ahead — in fact, your finances are headed for trouble. The best way to make sure that your income is greater than your expenses is to track them for a month or two and then make a budget. It can be a very simple budget, but you should have one. This is one of the smart things you can do for your finances.

Use your monthly spending habits, as well as your monthly take-home pay, to set a budget you know you can keep. There’s no use setting a strict budget based on drastic changes, such as never eating out when you’re currently ordering takeout four times a week. Create a budget that works with your lifestyle and spending habits.

You should see a budget as a way to encourage better habits, such as cooking at home more often, but give yourself a realistic shot at meeting this budget. That’s the only way this money management method will work.

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3. Start an emergency fund

Most of us are one emergency away from financial disaster.

The pandemic taught everyone about the importance of saving for a rainy day. How much should you have saved up in an emergency fund? Aim for 3-6 months of your net income.

First, open a high-interest savings account so your money makes money. Then, set up an automatic e-transfer of a percentage of your monthly income for your savings. Or, you can earmark the cashback from your credit card for your savings and redeem those rewards monthly. Either way, you can rest easy knowing you are taking small, meaningful steps to grow your emergency fund.

What matters most is that you start saving today. Even a small amount every paycheque can go a long way. Putting that money into a tax-free savings account (TFSA) might make withdrawals less tempting.

If you’ve tried before to start an emergency fund in the past but kept spending that money on non-emergency things, keep your emergency savings in a separate bank or financial institution. The need to switch up systems can help you pause before an impulse purchase or one-click buy.

4. Pay off debt

One of the smart things you can do for your finances is to pay off all of your debt. To get started, focus on your most expensive debt — the credit cards and loans that charge you the highest interest. Once you have paid off all of these debts, focus on paying off your mortgage.

For your mortgage, consider splitting your monthly payment in half and paying bi-weekly. Then pay extra as you can afford it. This will shave years off your mortgage and save you tons of money in interest.

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5. Start saving early

Someone who starts to save for their retirement early doesn’t have to save as much as someone who starts saving later in life. If two people decide to save for retirement, but one starts at 21 and the other at 31, of course, the early starter will have more money at the end of the day.

It is never too late to begin saving, but the sooner you begin, the better off you will be. It is one of the smart things you can do for your finances.

6. Invest for the long term

Investing, in general, is a good idea, and you can create a balanced portfolio without hassle. However, life isn’t just about money; it’s what you intend to do with it.

What are your long-term goals? Do you want to buy a house? You’ll need enough for a down payment. Do you want kids? You’ll want to set up an account when they’re born. Do you want to travel the world? You’ll need a travel fund.

It’s easy to get caught up in the day-to-day flurry of immediate financial needs. So, get clear on your long-term goals. Then, set up a “money date” with yourself every week or month to check in. Are you on track? Is there new information you have to learn? If you need to learn more about down payments and mortgages, or if you need to check that your debt payments won’t hinder your travel plans, your money date has you covered.

7. Never make hasty big financial decisions

There are no major financial decisions or major purchases that need to be made on the spot. All worthwhile opportunities will be there another day if you are patient. It is better to miss out on something and learn a cheap lesson than rush hastily into something and learn an expensive lesson.

When you take the time to sleep on big decisions you will consider other alternatives, evaluate whether you really need to do this, and probably get some other opinions. This is one of the smart things you can do for your finances.

8. Cut back on recurring charges

Do you subscribe to services you never use? It’s easy to forget about monthly subscriptions to streaming services and mobile apps that charge your bank account even when you don’t regularly use these services.

Review your spending for charges like these, and consider canceling unnecessary subscriptions to hold onto more money each month.

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9. Prepare for the future

Saving money for your future is crucial. If you don’t, you will have to rely on credit when times get tough, and then you may even need to work through your retirement years to supplement your small government pension.

Start saving on a regular basis using a Tax-Free Savings Account (TFSA) or an RRSP
Plan for your retirement. Figure out how much money you will need to retire comfortably, and then start saving. This money also makes a great rainy day fund if you lose your job.
Make sure you have enough insurance. Accidents happen. 1 in 4 people are hurt on the job. Natural disasters can easily cause tons of monetary damage to your home. Make sure you have enough insurance for the place you live and the lifestyle you lead.
Write a will and decide who will get your assets and/or children when you die. This lets you decide who benefits from all of your hard work.

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Wrapping Up The Smart Things You Can Do For Your Finances

Financial wellness (and success) can look so different based on your personal goals and priorities. This is why learning about the smart things you can do for your finances can be so powerful.

Learn how to budget the easy way. Breathe easier with an emergency fund and a debt repayment plan. Maximize your retirement savings. And whether it’s time or money, start investing in it now.

The path to better finances starts with changing your own habits. Some of these changes will be easier than others, but if you stay committed to this transformation, you’ll end up with great money management skills that will serve you throughout your life.

In the meantime, you’ll have more money in your pocket, and your future self will also thank you for it.