Financial wellness is about more than how much money you have. Your financial well-being includes all of your money habits; from spending and saving to buying and borrowing. Taking stock of your financial wellness can help you set new systems in place, create habits, and build the financial standing you need to reach your goals.
Use these tips to perform a financial health check and assess where you are versus where you want to be.
Getting an accurate measure of your financial health is easier when all of the information is in front of you. Add up any debts you have, run a credit check, and put together an outline of your monthly income, expenses, savings, and occasional costs. Running the numbers can give you a birds-eye view –– so you can step back and see where you’re truly starting from.
Now that you have a sense of the numbers, check your financial habits with these questions:
For some people, making enough money for a big yard or a house with a pool is important, and for others financial freedom means a solid cushion of savings or paying off tuition debts. Whatever your situation, financial wellness begins with a clear sense of where you want to end up. If you’re buying a home, consider costs like closing costs, maintenance, repairs, and land transfer taxes in addition to planning for a downpayment. If you’re planning a vacation, consider how much paid time off you have or what the detailed costs of flights and hotels will be.
Regardless of where you are in your financial journey, take time to record your financial goals and display them clearly on a bulletin board, desk, or mirror, so you’ll be reminded of what you’re saving and working toward. Your approach to financial health will partly depend on your life stage:
A credit score is a 3-digit number that offers credit bureaus a sense of how financially responsible you are, and how likely you are to pay your bills on time. Credit scores in Canada range from 300 to 900. To improve your credit score:
A financial advisor can support your financial health at any life stage; with insights on building an investment portfolio, estate and tax planning, financial planning, and more. Research shows that Canadians who work with financial advisors are more likely to reach their financial goals and build wealth; in a 15-year study, investors who worked with financial advisors had almost 4 times the assets of those who didn’t.
If one of your financial goals is to purchase a home, you’re likely saving up for a mortgage downpayment. A downpayment is important because it impacts your interest payments, the monthly mortgage payments you’ll owe, and the price of the home you’re able to buy.
In Canada, the downpayment percentage depends on the home price:
Keep in mind that a downpayment of less than 20% requires mortgage default insurance. Online calculators can help you calculate the downpayment you may need.
Using your monthly budget and savings goals, establish how much money you could comfortably put aside every month in order to reach your savings goals, and how long it would take for you to save the amount needed to purchase the kind of home you want to buy. Make sure you’re prioritizing paying off high-interest debts and ensuring you still have enough room to maintain your lifestyle.
Homebuying can be an overwhelming process. Houseful is here to provide support and guidance at every step of the way. For a new and differentiated homebuying experience, sign up at houseful.ca.
Find more information on how to buy a home, how to sell your home, and mortgage and finance tips, see our Home Journey How-To’s or sign up at houseful.ca.
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
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