Investing in Challenging Times

Tips for investing in challenging economic times

Good Advice for Hard Times

An economic downturn usually makes people more aware of the importance of saving and spending their money wisely.  Here are a few tips you can adopt to help you manage your money wisely during such periods.

 Pay off your debt

The repayment of debt is the best investment you can ever make. A downturn in the economy means fewer job opportunities, wage cuts, and rising unemployment. In order to protect yourself, it is wise to repair your personal balance sheet. Reduce your spending and use the money you save to reduce personal debt first (credit cards, overdrafts, loans), then your mortgage. Build a cash cushion to help meet unexpected bills or to cover expenditure if your income falls.

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Financial Tips For Teens

This week in our series on investing for life stages, we’re putting the spotlight on those critical teenage years where future financial habits can be nurtured and developed.

As you enter your teenage years you will begin to make some “grown-up” decisions about how to save and spend your money.  That’s why learning the best ways to manage money, no matter how small is one of the most important lessons that you can learn in life.  The first thing that you have to do is set goals for yourself. Then you must make the right choice with your money to help you achieve those goals.

Here are some suggestions to consider:

Save some money before you’re tempted to spend it

When you get cash for your allowance, birthday, or from a job, automatically put a portion of it, at least 10 percent, (or possibly more)  into a savings or investment account. This strategy is called “paying yourself first.” It comes from an old saying, “What the eyes don’t see the heart doesn’t grieve for.” Basically the premise is that if you don’t have it easily accessible you learn to live without it.  Making this a habit can gradually turn small sums of money into big amounts that can help pay for really important purchases in the future.

You should consider putting the spare change that you find when you empty your pockets at the end of the day, into a jar or any other container, and then about once per quarter putting that money into a savings account at the bank to earn you interest.

Keep track of your spending 

A good way to take control of your money is to develop a budget or spending plan. This is when you decide on the maximum amounts you aim to spend each week or each month for certain expenses, such as entertainment and snack food. To help manage your money, you should make a list of your expenses for about three months, so that you have a better idea of where your dollars and cents are going. If you find you’re spending more than you intended, you may need to reduce your spending or increase your income depending on which is easiest for you to do at a particular point in time.

Consider A Part-Time Job 

Whether it’s  babysitting, washing the neighbour’s care or a job in a “established” business, working outside of your home can provide you with income, new skills and references that can be useful after secondary school. Before accepting any job, ask your parents for  their permission and advice. Once you start to collect your pay cheque you need to determine how to apportion your earnings.

Think before you buy 

Many teens make quick and costly decisions to buy the latest clothes or electronics without considering whether they are getting value for their money. Before you buy any item you should ask yourself if you really need or just want the item. Based on the response to that question you should conduct research on where the item is available and engage in some comparison i.e shopping to get the best value for money. Remember that life is about choices, so sometimes in order to purchase a particular item you may have cut back on spending for something else.

Be careful with cards 

For those of you using a debit card, which automatically deducts purchases from your back account, always remember that bank cards offer convenience, but they also come with costs and risks that must be taken seriously.

Be smart about college 

If you’re planning to go to college or to pursue any post-secondary education, take advantage of any available government assisted programmes. Remember however that there are costs to be borne by you.  Start doing research on the major expenses which may include tuition, books, fees and housing.

If you’re a past the teenage years, it’s definitely not to late to learn how to manage your money better! In our next post we’ll talk about how young adults can better understand personal finance for prosperity!