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In the age of social media, you may be fooled into thinking that the curated version of people’s lives that you see in your feed is reality.
But Vancouver-based money coach Parween Mander knows that digital highlight reels too often paint a picture of people’s finances that doesn’t quite line up with their reality.
“We don’t get to see their lows,” she says. “It’s hard not to compare your life to milestones that others hit. And that’s when shame starts to seep in.”
Mander is an accredited financial counsellor and a proponent of New Year’s resolutions that focus on mastering your money.
She and other personal finance experts agree that the way you approach, structure and keep tabs on your financial goals dictates how successful you are in maintaining them throughout the year.
Here are five tactics that could help you.
Before crafting a New Year’s resolution, Mander suggests a short, comprehensive audit of the year that just passed: familiarize yourself with your income, savings, investments, debt and major expenditures.
That means glancing at every bank and investment account, every major bill and obligation.
“It’s important to reflect on what went well or didn’t go well with finances in the previous year to create a roadmap for improvement,” she says.
Once you’ve identified your goals, you can decide on a strategy.
Mander’s approach to debt deviates from the traditional approach of “aggressively tackling the debt very quickly” because she prioritizes savings and creating a buffer.
It’s a sign of the times.
The Financial Consumer Agency of Canada finds that more than half of Canadians (54 per cent) are struggling to pay bills.
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With that many households living precariously from paycheque to paycheque, Mander worries about emergencies cropping up from a vehicle or furnace breakdown, family obligation or other unexpected large expenses.
“For my clients, building up that buffer of savings first as an emergency fund is key,” she says.
Mander recommends having at least three months’ worth of money to cover expenses and obligations, but six months may be appropriate if you’re self-employed or in an industry that’s susceptible to layoffs.
This may be a lofty goal and she recommends not becoming discouraged if it takes a year or more to build up enough savings for a proverbial rainy day.
As you work on your savings goals, you can also tackle your debt.
The rising cost of living has taken a toll on Canadian households, with nearly four in 10 Canadians taking on new debt in 2024, according to a recent survey by the Office of the Superintendent of Bankruptcy and the Canadian Association of Insolvency and Restructuring Professionals.
There are, generally, two paths when it comes to reducing or, ultimately, eliminating your debt, according to Mander.
One is to prioritize paying off your highest-interest debt.
The other is the so-called “snowball effect,” where you completely pay off your smallest debt for a “quick motivational win” before tackling your other debt.
If you have multiple “debt buckets,” Mander recommends starting with the snowball approach to eliminate your smallest debt (or debts) before moving to prioritize your highest-interest debt.
“Don’t be afraid to experiment, but I think a good place to start would be with that lowest-balance debt to begin with,” she says.
Craft ‘money practices’ and ‘money values’
Personal finance expert Melissa Leong says she starts the new year strong, but falters as the weeks pass.
“All of my resolutions lose steam by February,” she says. “Because when you set financial rules for yourself, it can be rigid and demotivating.”
Leong is the author of Happy Go Money: Spend Smart, Save Right and Enjoy Life. Her unconventional approach to resolutions is to scrap them and craft “money practices” instead.
That’s because money practices focus on actions, which can be implemented immediately, rather than end goals.
Leong’s go-to is automation, whether it’s setting up automatic savings or bill payments.
That way, you’re not relying on willpower, which ebbs and flows.
She’s a big believer in practices and values over rules.
“Instead of saying, ‘I resolve to be more careful with my impulse shopping,’ write a value or an identity that you want to embody,” Leong says. “Like ‘I am a conscious spender,’ and then write a practice that supports that.”
For example, “a conscious spender would press pause on a non-essential unplanned purchase over $100 for 24 hours.”
Progress, accountability and grace
Leong’s approach touts “progress versus perfection” by identifying financial habits you want to improve and tracking your dedication.
“Pick one tiny financial habit and track the streak, not necessarily the dollars, but how consistent you are,” she says.
Leong recommends creating something to keep you accountable.
For her, it’s a WhatsApp group with trusted friends.
It keeps her on track but she’s also designed it to incorporate room for error.
“Give yourself grace,” she says. “It’s OK for me to miss up to three times, maximum. We’re not trying to win the Super Bowl, we’re trying to practise every week.”
Another tip to keep her on track is renaming accounts to reflect specific savings goals: vacation, daughter’s wedding, emergency or even “future me.”
“Studies show that money with a name is harder to steal from yourself,” Leong says.
Regardless of your personal money goals, the endgame is “financial empowerment,” according to Leong.
And building that knowledge and skill set takes time.
“It’s not a light switch you flip on Jan. 1. It’s more like learning a language, building muscle. So you don’t just wake up fluent, or fit, you go on a journey,” she says.
