financial strategies

To truly appreciate the role that inflation plays in your ability to build assets and achieve financial freedom one has to consider the role of its dance partner: purchasing power. You can't have one without the other!

Financial planning methodologies have evolved over the past 30 years with the advent of increasing computational power. Originally, planning was a simple spread-sheet based projection of your current situation, plus some assumptions, such as savings rates, tax rates, investment returns and inflation rates. This would give you an idea of what your final destination would look like with much of the calculations being driven by Future Value and Present Value tables.

The purpose of this series is to educate consumers on some simple principles that will take the mystery out of the often complex world of managing one's financial affairs.

The first distinction is to realize there are only seven variables that can be manipulated or managed in creating your financial future and wealth. They are:

Give your finances a boost this new year. Here is a list of financial resolutions to help you become better off at the end of the coming twelve months:

Eliminate personal debt. - Brad and Angie had fallen into the very common habit of buying lots of 'stuff' with their credit cards and soon were carrying a balance from month to month. At 19.9%, it is very expensive to live this kind of lifestyle. And any new purchases attract the same financing charge from date of purchase.

History tells us about half of marriages in Canada end in divorce. Andrew and Sara are about to end theirs and are concerned about the changes that will have to be made to their financial and estate plans. Some financial and estate issues they need to consider are:

The neighbors have a shiny new sport utility vehicle to tow their travel trailer. They take a two week tropical vacation every winter. Their family room is equipped with the latest large screen TV and surround sound stereo system. Many people believe this is a sign of wealth. In fact, this is usually a sign of consumption.

More often than not, the above lifestyle is funded with huge amounts of debt.

With so many doom & gloom news headlines, it is refreshing to know Canadians can still get very low fixed rate mortgages. A recent Financial Post article (March 9, 2012) explains that with big banks competing strongly for new mortgage business, now is a great time for Canadians to refinance their mortgages to improve personal cash flow.

Some financial decisions get made without enough thought given to the long term consequences. Here are some financial mistakes you can avoid:

Mortgage amortized too long:

With lenders offering 30 year amortization periods, it may look attractive to go with a smaller monthly payment to get into a larger house, but the extra interest charges only benefit the lender.

A recent TD Canada Trust survey found that 10% of Canadians are considering the purchase of a condominium for their adult children. This is up from 5% just a year earlier and certainly reflects drastically increasing housing costs over the past decade.

These days, having a career presents many new rewards and far more challenges than it ever used to. What we used to take for granted, including our work location, has changed dramatically as companies continue to grow and even go global.

This can be great for a business and its bottom line, but really tough on the employees within it. Because we never know exactly what the future holds, you may find yourself facing a job transfer at some point along your career path.