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Ten Financial Resolutions for 1998

  1. Take better care of yourself. Poor health is the biggest threat to financial security. A good diet helps a lot and can save money too. At $6,000, groceries are an average family’s third highest expense. Income Tax and shelter are the two highest.

  2. Get educated about Retirement Plans and investment vehicles such as Stocks and Mutual Funds. Does your employer have a retirement plan? Understanding the various plans will be increasingly important as you get older.

  3. Maximize your RRSPs. About 90% of Canadians do not save as much as they can into their retirement plan. Who knows the future of the Canada Pension Plan? If you make early or monthly RRSP contributions, ask Revenue Canada to reduce your withholding tax at source.

  4. Plan simple monthly and annual budgets with your spouse and children. Involving your children can help them learn about money management.

  5. Resolve to "pay yourself" first. This is a proven savings approach. The best ways are through payroll deductions or mutual fund pre-authorized chequing plans. A common target is to start saving 10% of net pay and gradually move to 10% of gross. Set a disciplined investment strategy.

  6. Establish a cash cushion for emergencies. Keep three to six months’ expenses in money market funds, short-term deposits, treasury bills.

  7. Make sure you have adequate life and disability insurance. Generally, a 10 year renewable and convertible term policy offers the best deal for covering your family while the kids grow up. Permanent policies usually work best for estate planning and business succession.

  8. Check what your car, home and travel insurance does not cover. Increase deductibles and pay annually instead of monthly to save on premiums.

  9. Complete a power of attorney authorizing someone you trust to take over your affairs if you become incapacitated. Without it, your spouse can’t simply step in.

  10. Take advantage of low interest rates. Pay off your credit cards and use them for emergencies only. Use a debit card instead. If you don’t have cash, consider a personal loan or using your line of credit.