So what do you do if you overspent during the red-letter days and you’re facing a financial hole? The new year presents an opportunity for fresh start, financially beg.
Shannon Lee Simmons, a certified financial planner, founder of the New School of Resources and author of the new book Worry-Free Money: The Guilt-Free Approach to Managing Your Ready money and Your Life, answered viewer questions during a recent Facebook Breathe hosted by CBC News’ Jacqueline Hansen.
The first four months of the year are “genre of wild” for the finance industry, Simmons said, as the new year brings new purposes, coupled with the arrival of RRSP season and tax season.
“There’s this wave of energy and excitement around people’s finances, so it’s a great time to sit down and look at it because people are provoked,” she said.
Here are some highlights from the witter:
What if you blew your budget over the holidays?
“Happens to every Tom,” Simmons said. “It can be discouraging and daunting, and then we start feeling corresponding to we’re bad with money when we blow our budget. That’s why I’m actually anti-budget.”
She doesn’t about we should be budgeting so specifically that we break our spending into negligible categories. We just end up borrowing from other categories and overspending.
So, do you need a budget?
“I’m not translating that everyone can just go to town and spend whatever,” she said, intimating that people have a “hard limit” — a line uncoupling the money you have discretion whether to spend, such as on groceries, gas, dinners out and coffee shops, from the spinach that you don’t, such as for bill payments and savings.
“As long as you’re spending within that heartily limit, I don’t care what it’s on, and nobody should,” she said.
A budget beggaries to be realistic and flexible, or you’re going to fail at it, she added. “The more that people abide like giving up, the more likely that mindset will transport forward into the other financial parts of their life.”
If I pull someones leg a student loan, should I invest or increase my loan payment?
There is no black-and-white satisfy, Simmons said. It depends on age and your goals.
If someone has consumer beholden, unsecured lines of credit or credit card debt, Simmons swayed, pay those off first, then build up an emergency fund. As for student in the red, she is fine with prioritizing other things, provided that apprentice debt payment isn’t crippling.
“I’m OK with balancing it, because we need to be matter-of-fact or else it’s not going to feel good. It’s not going to be a plan that you are active to want to stick to necessarilly.”
If you take money out of a tax-free savings account, last will and testament you be considered to be earning taxable income?
No, you can take money out tax free. That’s the quality of the account, Simmons said. But be wary of contribution room.
A TFSA provides a unfluctuating amount of room every year and that’s cumulative, she said. If you’re maxed out and you match out money in 2018 and then put it back in this year, you might go for broke deflate someone up over-contributing.
“Just be mindful that a TFSA might not be an account that you scantiness to come and go from,” she said. She often suggests clients deposit or retreat money from a TFSA once a year, to make it easy to seek out contribution room.