“If we command our wealth, we shall be rich and free. If our wealth commands us, we shall be broke indeed.” – Edmund Burke

A new survey from Finder suggests that many Canadians may be listening to Burke’s keen advice by taking control of their finances during economic uncertainty:

Top financial resolutions for 2023 according to a survey from Finder. Saving more money, paying off debt, sticking to a budget, and investing more money are the top 4 goals.

Tips to Save More Money in 2023

Although it accounts for most responses, it is not the experienced advice you seek from a Family Wealth Advisor when it comes to financial management. The usual suspects of eating out less, cutting back on streaming services, putting off buying the latest fashion lines, and saving travel for another year are all sound methods for spending less. But that’s only half the equation; what about saving more?

Why Paying off Debt is Important in 2023

Breaking away from Finder’s results, a CIBC survey found that paying down debt is the top priority for respondents in 2023. As a clearly definable objective, shedding debt may be a more rational approach for many Canadians.

With interest rates still climbing in 2023 (4.5%, the highest since 2007), it would be wise to avoid taking on any new debts. Dialing back your credit card usage, or other short-term loans, and taking inventory of how often you’re using it to make unnecessary expenses can help you create a spending plan going forward.

But what about more substantial, complicated loans for homeowners? It depends on your mortgage itself:Chart explaining 3 different popular mortgage structures.

The trigger rate is an important function for variable-rate mortgages with fixed payments. In essence, once the interest due equals the total payment owed for that period, the trigger rate has been reached. Under these conditions, your payments are not paying down the principal amount (the loan to purchase the house) and just the interest owed.

This has been rare over the past decade before recent events, but with this mortgage structure becoming more popular, the Bank of Canada is forecasting that 17% of all mortgages will reach their trigger rate by mid-2023.

If you are unfortunately in this situation and don’t have a Family Wealth Advisor to see you through with a tailored plan, you may be required to increase your payments, make additional payments to cover excess interest, or change to a fixed-rate mortgage.

It’s always worth conducting a cost-benefit analysis. Will you be better off with a high-interest savings account, or will settling your debt save you more in the long run? A trained professional can help you figure all of this out, and hopefully keep you out of this situation in the future.

Making, Updating, and Sticking with a Budget in 2023

It starts with a Bellwether Family Wealth Advisor, and it ends with you taking control of your future. Holistic financial planning takes every unique piece of your financial puzzle into account. Numbers and models are one thing, but looking beyond them is a whole other level of preparation that you deserve.

A good place to begin is to understand your long-term goals and, given the forecast for 2023, how short-term obstacles may interfere. Having this kind of scope can account for the complexity of real life, enabling a dynamic, evolving plan that is better aligned with your goals as they adjust to the overall market.

However, steps you can take yourself are by investing for the future with the tools you have in the present. Investing in your TFSA and RRSPs sooner not only accrues interest on a tax-deferred basis earlier, but also helps you have a better understanding of where your money is being put to work by having separate accounts for separate uses.

Investing Strategies for 2023

We can’t exactly give away all our secrets, proprietary funds, or investment strategies—those are for our clients. But maybe we can interest you in the reasons why Alternative Investments can help dampen volatility and safeguard your capital during trying times.

If you’re interested in learning more, setting yourself up for 2023 and beyond, and finding financial advice that works for you, contact a Family Wealth Advisor today.

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© Bellwether Investment Management Inc. 2024. This communication is intended for residents of the provinces in which we are registered and is not meant to be a solicitation to any persons not resident in those provinces. Any opinions expressed in this article are just that, and are not guarantees of any future performance or returns. Some of the information contained in this article has been drawn from sources believed to be reliable but due to the fact that it is provided by a third party, it cannot be guaranteed to be accurate or complete. Bellwether Investment Management Inc., Bellwether Estate and Insurance Services Inc. and Bellwether Family Wealth cannot provide tax advice and therefore we recommend that you consult your tax advisor for further assistance with your tax planning and the preparation of your tax return. The report is prepared for general informational purposes only and the securities mentioned in this report should not be construed as a recommendation for any specific securities.

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