1. Make a plan.

Having a financial plan is about more than figuring out how much of your paycheck is left after the bills are paid. Your plan starts with thinking about what you really want to do. What goals do you have? Do you want to travel? Buy a house? Own a business?

Being successful, whatever that means to you, starts with having a clear idea of where you want to go and then making a plan to get there. Creating a budget is a key part of any financial plan and will help you achieve your goals and stay focused. If necessary, look for resources that provide budgeting or other money management tips.

2. Save for the short term.

Don’t put yourself in a situation where you have to rely on credit for unexpected expenses. One of your top priorities should be building up your emergency savings. As a guide, experts recommend saving at least three to six months’ worth of living expenses.

If you are planning any larger financial purchases like a home or car, consider setting up a separate saving account for those. Big-ticket items like a Disney vacation are much more enjoyable if the whole thing is already paid for and you aren’t racking up credit card debt.

3. Invest for the long term.

Saving for retirement should be another top priority. When investing long-term, you’ll want to consider putting your money in something other than a standard savings account that has tax benefits. The most popular accounts that can allow your money to grow tax-free until you are older (hint: age of withdrawal without penalty is 59.5) are 401(k)s and Individual Retirement Accounts (IRAs). You may want to get financial tips and guidance from a professional advisor.

You’ll also want to start saving as much as you can as early as you can to maximize the compound interest you can make, which is basically interest you’ve made on the amount you’ve invested also earning interest.

4. Use credit wisely.

Using credit responsibly is an important part of a sound financial plan because your credit score impacts your ability to make almost any big financial purchases. Be sure to pay your bills on time, every time, and try to keep your balance well below the limit of the card. Pay attention to the ratio of how much debt you currently have to how much you can borrow. This number should stay below 30 per cent or it can negatively impact your credit score.

5. Choose a reasonable rent or mortgage payment.

Housing costs are generally the most significant part of everyone's budget, as well as a major emotional investment. The search for the "perfect" home can easily extend your budget beyond what's really comfortable.

When setting a housing budget, be sure to include all fixed costs and consider what amount you really want to pay. Keep in mind if you are buying a home that just because a lender approves you for a certain home loan amount does not mean that amount is ideal for your budget. The lender is looking out for their best interests — not yours.

You may also want to make a list of features you "need to have" and ones that are "nice to have" so that when decision time comes, you can make a thoughtful and financially sound decision. Being realistic about what you want and what you can afford upfront can save a lot of financial stress later on.

6. Treat yourself.

One of the biggest mistakes people make when getting their finances in order is becoming too strict. If we constantly deny ourselves the things we love the most, we will eventually cave in to the pressure and make mistakes.

Studies have shown that willpower is a limited resource — you can only resist so many temptations before you will give in. If you were dieting and decided you would never again eat your favourite cookies, you’d probably last all of a few days before you broke down and gorged on two entire boxes. This applies not only to temptations of food but also financial temptations as well.

When considering how to manage money, the savviest financial minds will tell you that you have to make room for indulgence in the budget to stay on track. Set yourself up for success. Add in a date night or a vacation here and there. Reward yourself when you hit a savings goal with a night out or a movie.

7. Never stop learning.

The world of finance is complicated, but money is a necessary part of life. You don't have to understand everything, but in order to stay financially secure, you need to keep learning about tools and resources you can take advantage of to make what you have worked hard for you.

Take stock of what you already understand; then build on that with books, classes or savings advice from a professional. Before you know it, you’ll be sharing your expertise on how to manage money effectively with friends and family.

4



  4