Financial success isn’t about doing one big thing right – it is about doing a lot of little things right that sets your financial plan up for success. Financial freedom is about having the flexibility to live the life you want without the fear and burden of outliving your money.
The Bank of Canada is set to release its interest rate decision on Wednesday, and odds are tilted in favour of a hike of 25 basis points. If this happens, it will be the third rate hike since July 2016.
According to a recent survey by MNP, 33 per cent of Canadians said they are unable to meet their monthly bills and debt repayments. As debt levels continue to mount, you can understand why so many Canadians are overwhelmed and fear financial ruin as rates continue to move higher.
My best piece of advice for these changes? Breathe and relax.
Delinquency ratios and bankruptcy levels continue to be at near low record levels. That is good news. The bad news is it can easily change as rates head higher, increasing the odds of financial hardship as more Canadians find it increasingly difficult to make ends meet and service their debt.
Before it’s too late consider the following:
- Long term financial success doesn’t happen overnight. This is where the classic phrase, “Slow and steady wins the race” applies. You need a plan and just as importantly, you need discipline to execute that plan. The goals you create have to be your goals – ones that matter to you and get you excited. If being in debt hurts enough, you will make some changes.
- Set yourself up for success. Create goals that are achievable, small but stretchy enough to provide you with the motivation to keep going. We often focus on negative events such as losing your job, but equally stressful can be the birth of a child. Both have a significant impact on your finances. It is important to recognize that when life events happen, your financial plan can be altered too. Your goals are not carved in stone.
- Patience, as they say, is a virtue and a key component to financial success. Time and compounding works wonderfully well when you’re saving and can accelerate the path to financial ruin when you owe money. No trajectory is straight up and seldom is it straight down.
- Breathe and relax. Your financial decisions in a perfect world should not be emotionally driven. The emotions around investing and spending in part have led us to where we are today with increasing anxiety about our ability to cope financially tomorrow.
It is not okay to live for today and not save anything for tomorrow. It is about financial balance.
The landscape is uncertain and it’s reasonable to have a certain element of doubt, but it shouldn’t keep us down. Stop, breathe, relax and take some action. You are in control of your financial destiny and you are in drive seat.
Regardless of what the Bank of Canada does, it is time to take charge now before it’s too late. No one is going to care more about your financial future than you.