financial strategies

To truly appreciate the role that inflation plays in your ability to build assets and achieve financial freedom one has to consider the role of its dance partner: purchasing power. You can't have one without the other!

Financial planning methodologies have evolved over the past 30 years with the advent of increasing computational power. Originally, planning was a simple spread-sheet based projection of your current situation, plus some assumptions, such as savings rates, tax rates, investment returns and inflation rates. This would give you an idea of what your final destination would look like with much of the calculations being driven by Future Value and Present Value tables.

Give your finances a boost this new year. Here is a list of financial resolutions to help you become better off at the end of the coming twelve months:

Eliminate personal debt. - Brad and Angie had fallen into the very common habit of buying lots of 'stuff' with their credit cards and soon were carrying a balance from month to month. At 19.9%, it is very expensive to live this kind of lifestyle. And any new purchases attract the same financing charge from date of purchase.

History tells us about half of marriages in Canada end in divorce. Andrew and Sara are about to end theirs and are concerned about the changes that will have to be made to their financial and estate plans. Some financial and estate issues they need to consider are:

John and Jane had spent many months planning for their special day. They had also budgeted and spent many thousands of dollars to celebrate their wedding. Now what?

Since John and Jane have made a for richer or poorer commitment to each other, it's time to do something about it; and they need to start right away. Following is a list of the primary areas that will need their immediate attention:

Many people have no idea. Some people have a vague idea. A few people, a very few, have it all worked out. When it comes to retirement planning, many people don't take action until forced to by a mid-life event (career change, death of loved one) or by hearing about seniors running out of money. It's strange that people find it so difficult to plan for their retirement. As all the basic financial books say, you start by recording your expenses, see where you can cut back, and then determine how much you need to save to achieve your retirement income goals.

With so many doom & gloom news headlines, it is refreshing to know Canadians can still get very low fixed rate mortgages. A recent Financial Post article (March 9, 2012) explains that with big banks competing strongly for new mortgage business, now is a great time for Canadians to refinance their mortgages to improve personal cash flow.

Some financial decisions get made without enough thought given to the long term consequences. Here are some financial mistakes you can avoid:

Mortgage amortized too long:

With lenders offering 30 year amortization periods, it may look attractive to go with a smaller monthly payment to get into a larger house, but the extra interest charges only benefit the lender.

Most people want financial freedom over financial servitude. Who doesn't want to be financially independent, where their money is working for them rather than working for their money? The problem for most Canadians is that financial freedom can be a struggle of living paycheck-to-paycheck or where spending tends to win out over savings. Ultimately, financial freedom is not so much a single choice to attain it, but about daily choices that can make it a reality.

Recent studies have shown that as many as 60% of Canadians will not have saved enough money in order to adequately provide for their retirement. The problem for most people is not that they plan to fail, they simply failed to plan, adequately. And, while many may have been conscientiously saving towards retirement, somewhere along the line they lost sight of their target. Either the target never existed or it was never very clear in their sights. Without a target, they can't possibly know where or how high to aim.