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10 TIPS TO MAKE SURE YOU HAVE A GREAT 2011

    

1. Revisit and Redefine All of Your Goals

It is the start of a brand new year and a great time to revisit and modify all of your goals and dreams! What short term and long-term goals do you want to accomplish in 2011?  When a new year arrives it gives people a new excitement and hope about what they want to accomplish. Start getting into shape and quitting some not so great habits are among the most popular new years resolutions but what about financially? Start setting your financial goals early and not just "I want to have less debt in 2011". Define your goals and be specific. How are you going to have less debt in 2011?

2. Get a Plan In Place

A financial plan is more then just managing your investment account. If you can get a good financial plan in place this will really look at the big picture. Everything from retirement or education saving plans, revisit insurance and investment portfolios, debt freedom dates, goals and dreams you want to accomplish in your life. This will get you on track to your financial independence! You do not need to be a millionaire to get one of these done there are a lot of great financial advisors out there that will do this complimentary!

3. Get Some Professional Advice

Although many people feel that they can manage their finances all on their own, it is a lot to handle in today’s busy world. There are some great financial advisors out there that want to get you back on track and they are not only looking for people with thousands of dollars to invest.

4. Create An Emergency Fund

How many of us rely on our credit cards when an emergency comes up that we need to deal with right away? (Leaky roof, car troubles, parking ticket,) In case there is a major change in your life (becoming unemployed) and you need cash to live on typically financial advisors recommend that you keep 3-6 months of living expenses in a safe short-term mutual fund like a money market account. Relaying on an RRSP or credit cards are not a great idea for an emergency fund because there are usually fees when it comes to withdrawing from your RRSP and credit card companies have very high interest rates.

5. Plan For Retirement Now

For some of us retirement is a very long time away and for some of us it is just around the corner. The fact is the earlier you start to prepare the better off you are going to be and not to mention the earlier you can retire! A good financial plan will show you what you need to do to be able to retire comfortably. How much you are going to need to live on etc.

6. Know Your Risk Tolerance

First of all you want to make sure that you have a good financial advisor who has your best interest in mind and not their own! Your financial advisor should be able to help you with this by stating the reasons why you want to be in certain funds. Depending if you are in it for the long term or short term is a big factor. I would not recommend that you would want to be in a high-risk fund unless you are an active investor and have vast knowledge of the market. There are many great funds that perform 8%-11% and they are low to moderate risk levels

7. Get Protected

Review your insurance policy incase your situation has changed. You might be over protected or under protected. If you do not have any in place and you now have dependent children and a mortgage it is very important that you get this done for the sake of your family. If you have read my other posts you should know which kind of income protection I recommend. The purpose of life insurance is not to have it for your whole life. It is to replace the income brought in by the breadwinner so your family will not suffer financial devastation along with the loss of a family member. Income protection is for the early years of life when you have a mortgage and a family to support, so god forbid if something happens to you, your family is not left with debt that they cannot afford.

8. Debt Consolidation

A debt consolidation is a great way to wrap up all of your debt, (mortgage, credit cards, car loans etc.) into one lower payment each month. By freeing up some money each month instead of taking the extra cash and getting yourself in to more debt take the majority of what save and put it back towards the principle. The extra that you have left over put in into you savings account or emergency fund! By doing this you will be out of debt much sooner and you will have accumulated a good amount of wealth in your RRSP or TFSA when you become debt free.

9. Create a Will

We don’t like to think about this but it is something that is necessary. I’m sure the last thing we want is the government or lawyers determining where are wealth goes when we pass on, therefore we need an updated will in place so we can control where it goes.

10. Continue to Self Improve

Although this may not be a financial tip by continuing to raise your awareness level will help you achieve certain financial goals. Reading is a great way to self improve even if it for only 15 minuets before bed. There so some great books on managing your personal finance.  

CBC News - Money - Year-end tax tips

CBC News - Money - Year-end tax tips

With the end of the calendar year drawing near, people's thoughts turn to the festive season — food, gifts, a brief respite from work. Accountants also think of the things that must be done by Dec. 31 to claim extra tax breaks.

One tip: the Canada Revenue Agency's current prescribed interest rate for loans to a spouse is still just one per cent and is expected to move higher in 2011. 'So now may be a good time to lock in a family loan at this rate and achieve future tax savings,' says a tax advisory from KPMG. (iStock)

The Truth About Life Insurance - Insurance - daveramsey.com

      The Truth About Life Insurance - Insurance - daveramsey.com

     

Robert Kiyosaki Explains The Cash Flow Quadrant

In the world we live in today there are only 4 legal ways to make an income! In this video by Robert Kiyosaki he explains these four different ways. On the left side of the quadrant you have the employee and the self-employed section.  95% of North America’s population fall under this category. The other 5% makes up the right side of the quadrant, which are owning a business and becoming an investor.

We start off in the employee section. What this means is you rent your time out to someone else in exchange for a paycheck. While most people like the security of becoming an employee there is usually no room to grow or advance. The other major factors include no control of your time and paycheck. As we move down a quadrant into the self-employed section you have taken control of your job and you now own it. There are many respectable careers that fall under this quadrant for example; a doctor, dentist, lawyer, real-estate agent. These professionals now own their jobs. The problem with this quadrant is although they might have control over their income they have to be working in order to get a paycheck. They do not have a system or other people working for them. Which means the more money they want to make the more time they have to put in. Why do you think your dentist is calling you every six months? Unless he has people sitting in his chair he is not making any money!

This brings us over to the right side of the quadrant. The top right quadrant would be owning a business system where you have other people working for you, which creates a residual or passive income. This is how you create a wealth machine! If you look McDonald's for example they have created the ultimate business system where they literally have a teams of teenagers running the business and the owner is no where to be found. (Now remember I am talking about the business system not the food!) The problem with owning a McDonald's is it costs about $1.2 million.

The Last quadrant is the investor quadrant. This is ultimately the most rewarding quadrant to be in. This means you have enough money invested that your money is going to work for you! Now that’s what I'm sure you like to hear. If you are in this quadrant you are enjoying complete freedom due to financial independence. What most people don't realize is that eventually one day we all have to end up in this quadrant. There will be a day in everybody's lifetime where they become physically unable or to old to work. At this point we better have enough money saved that we can live off it for the rest of our lives. Especially now with more and more companies getting rid of their pension plans, not to mention some companies can’t even afford to pay the pensions they already have in place.

Now you are aware on how people make an income the million-dollar question is what side of the quadrant do you want to be on?

Dave Ramsey on Term Life Insurance and Whole Life Insurance

RRSP vs. TFSA

Is one better than the other? 

It really depends on who it is for and what they are looking for. 

If you are looking for an immediate tax break then maybe an RRSP is better but maybe it would benefit you in the long run if you didn't have to pay taxes on your withdrawals from a TFSA, see it all depends on what you are trying to accomplish short and long term!

Check this out 

RRSP vs. TFSA

https://docmgt.dynamic.ca/documentdownload/getdocument/1254

This just shows you how much interest you will save if you do not have a car payment!

http://www.daveramsey.com/media/flash/elearning/drive-free/player.html

The rule of 72

The Rule of 72 says that your money will

approximately DOUBLE at a specific point in

time, which can be determined by dividing 72

by the percent of interest that your investment

earns!

Dave Ramsey's example of Ben and Arthur both getting a 12% rate of return until age 65



The earlier you start the better! When time is on your side it could make you millions!