Calculating your net worth sounds scary but is actually easy and will make a lot of other personal finance calculations and decisions much easier. First, knowing it will give you some credibility and confidence. Second, your net worth is one number that will tell you exactly where you are financially. You need to know where you are in order to make a plan to get to your goal (financial freedom, retirement, you name it).
It seems like there is a constant flow of articles and news featuring people who don’t know how much to save for retirement. It is easy to sympathize with this problem but even after reading the articles I don’t feel like there is a clear answer on how much to save. There are many ‘rules’ that all seem to have as many pros as cons. I am going to breakdown a couple rules and how I got to my retirement savings goal.
Having an emergency fund decreases my stress because I know I have money in case of an emergency and lets me stick to my savings goals even when times are tough. Even with a good budget unexpected events happen.
An emergency fund must be easy to access and large enough to support you through a short period of difficulty. This could vary from job loss to poor health to a family crisis to any other challenge that you encounter. What they have in common – they would have a negative impact on your finances. An emergency fund will reduce your financial stress and decrease your dependence on credit cards when times are tough.
Last week Rob Carrick wrote about the minuscule (1.1% including inflation) returns the Toronto Stock Exchange (TSE) produced over the last 10 years. While accurate it is also demoralizing for many investors. Having a long time horizon is important but 10 years should be enough!
Happy Financial Literacy Month! This is one of the most important awareness campaigns of the year! I can picture you rolling your eyes at me. Financial literacy is important to all Canadians and most people know less than they should and even less than they think they do.