5 steps to boost your financial health

Welcome to our session on 5 steps to boost your financial health. Many people worry about money.  Today, we'll discuss 5 simple steps to help you boost your financial health and feel less stressed about money.

To start improving your financial situation, first look at where you stand now.

How you're doing financially includes items such as:

• How much you've saved,
• How much debt you have compared to your spending money,
• How much insurance you have, etc.

 If you're doing well with your debts, house payments, and saving for retirement, that's great! If you're having some trouble, don't worry. You can take steps to get better with money in order to help you reach your goals.

<On the slide:> TITLE: Step 1: Assess your current situation: Are your finances healthy?  Have you created financial goals for the future?

• Do you have a budget?
• Is your net worth positive or negative?
• Do you know your Credit Score?
• Do you have a valid will?
• Are you properly insured?

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Ultimately, the 5 steps we’re talking about today, if followed, will result in a financial roadmap. 

This roadmap can help you to:

1. Decide what's most important for your money,
2. See the big picture of your finances,
3. Worry less about money,
4. Organize your money better, and
5. Understand how to save for what you want.

But a financial roadmap isn't just about saving. It's also about having a better relationship with money. To do this, think about what you want in life. Social media can make you want to copy what others are doing. Instead, take a moment to ask yourself: "What does being good with money mean to me? How do I want that to look in my life?" This way, you're making choices that fit your own life, not someone else's.

Only you know what you really want for your future. Money goals can sometimes seem far away or hard to reach. Saving isn't just about watching your accounts grow. Setting clear goals helps you stay motivated and focused on what's most important.

Just like you'd carefully plan a home renovation, put thought into planning your money and retirement. It's not enough to say, "I want to retire early." You need to think about what you really want your life to be like. Once you know that, you can make smart choices about how to invest, save, and spend your money to reach those goals. Everything works together to help you get the future you want.

<On the slide:> TITLE: Step 2: Create goals, Define your priorities.

Where are you now?

Where do you want to be?

How will you get there?

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When you make goals, it's important to think about what you want to do in the short term as well as what you want to do later. This helps you prioritize. Short-term goals are things you want to do soon, usually within a few months or years. For example, you might want to save some money for emergencies or for a trip. Long-term goals are big things you want to do in the future, maybe many years from now. These often need more money and time to achieve them. For example, you might want to save money for retirement, or to pay off your house. Sometimes, goals can be both short-term and long-term. It depends on your situation. For example, buying a car or saving a downpayment for a home could be either, depending on how soon you want to do it.

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Short term:

• Build an emergency fund
• Pay off credit card debt and student loans
• Build a fund for minor repairs and home improvements
• Save for travel
• Save for a wedding

Long term:

• Save for retirement
• Pay off your mortgage
• Start a business
• Save for children’s education

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S.M.A.R.T. goals help you plan better. They have five parts that help you focus and reevaluate as needed.  S.M.A.R.T goals are:

1. Specific: meaning the goal is clear and easy to understand.
2. Measurable: You can track your progress with numbers.
3. Achievable: The goal is realistic and possible to reach. Setting lofty goals is OK, but you’ll likely want to break them down into smaller, bite-sized chunks in order to actually get there. 
4. Relevant: The goal matters to you and fits your life plans.  If a goal isn’t personally relevant, it’ll be hard to maintain the focus and energy required to achieve it.
5. And, the goal is time-based with an actual deadline to finish.

After you figure out what you want to achieve, you need to decide what's most important. Think about your current situation. And consider which goals you should work on first. Think about how your goals might affect other parts of your life. Are there any special things you need to keep in mind?

A budget can help with this. It's a plan that shows how much money you have coming in, how much you're spending, and what you want to do with your money in the near future and later on.

When making a budget, it's really important to know the difference between things you need and things you want. Things you need are essential, like a place to live, food, and medicine. Things you want are nice to have but not necessary, like eating out, going on trips, or buying fancy clothes. What counts as a need, or a want can be different for different people. It can also change over time as your life changes.

You'll probably have some short-term and some long-term goals. Start by fitting your goals around your regular expenses, focusing on needs like food and housing. It's usually a good idea to prioritize saving for emergencies and retirement. Paying off debt is also often very important.  But what goals are right for you will depend on your individual circumstances and priorities.

<On the slide:> TITLE: Step 3: Prioritize your goals. What is a budget?

A guide to spending your money

Lays out your income and expenses 

Considers your short and longer-term goals

Online tools, spreadsheets or good old-fashioned pen and paper all work. <End of slide>

<On the slide:> How to prioritize your goals <End of slide>

To decide what's most important to you, ask yourself either/or questions about your goals. Put your answers in order from most to least important, like a pyramid. Compare all your goals to each other to find the top ones and focus on those.

This might seem limiting at first because you might be like many others and “want it all!”  In reality, while you might achieve many goals in your life, you probably can't do them all at once.  Being decisive and honest is key. You’ll need to be clear about what you really want and need in order to achieve your goals.

<On the slide:> A list of 4 questions:

1. Money or time?
2. Travel or stability?
3. Learning or creating?
4. Family or self-cultivation? <End of slide>

We've used mostly non-money goals as examples on purpose, so you can see how goal prioritization can apply to many areas of life, but you can use this method for money goals too. For example, you might ask:

• Do I want to pay off debt or save for something specific?
• Do I want to rent or buy a home?
• If I'm going back to school, should I go now and borrow money, or wait and save up first?

Once you've set your priorities, it's time to take action. <On the slide:> TITLE: Step 4: Act on your plan <End of slide>

Try to pay yourself first.  To do this, make saving a regular part of your budget, just like any other bill. Set up automatic savings through your job or bank to make it easier. Everyone's money situation is different; how much you should save versus paying off debt depends on your income, expenses, and the type of debt you have.  <On the slide:> There is no one rule. Some people have a savings plan through their employment.  Some people have low-interest debt payments. <End slide>

If you don't have one, start building an emergency fund. Aim for 3-6 months of expenses. Even saving $10 or $20 a week helps. Set up automatic transfers to a separate, easy-to-access account.  It's better to use savings than credit cards or loans for emergencies. Credit cards have high interest rates if you don't pay in full each month. Lines of credit might have lower rates, but you still have to pay them back with interest.

During tough times, it's okay to reduce or pause your savings. Paying bills should come first. When things improve, you can start saving again.

Remember, small steps add up. Start where you can and adjust as needed.

Part of your action plan may include paying down debt.  If so, you've got a few options to choose from.

First, there's the avalanche method. This is all about tackling your highest interest debt first. You focus on paying off the debt with the biggest interest rate, then move to the next highest. This way, you'll save money on interest in the long run.

Then there's the snowball method. This is about starting small and building momentum. You pay off your smallest debt first, then move to the next smallest. It's great for quick wins that keep you motivated.

Another option is debt consolidation. This means taking out one big loan to pay off all your smaller debts. You end up with just one monthly payment, often at a lower interest rate. This can save you money and help you pay off your debt faster.

Choose the method that works best for you and your situation. The important thing is to have a plan and stick to it.  And, whichever method you choose, be sure to make the minimum payments on all your debts each month.

<On the slide:> Nothing grows your money like time <End of slide>

Once you've got your debts under control, it's time to think about saving for the future. Many Canadians use RRSPs to save on taxes and prepare for retirement. You might also have a TFSA or a pension plan.

When choosing where to save, ask yourself: "What am I saving for? Is this a short-term or long-term goal?" These questions can help you pick the right account.

An important concept to understand is the time value of money. Simply put, it means start saving as early as you can. It works because of compound growth - your money grows on top of itself over time. Starting early also means you can save smaller amounts each month, which can be easier on your budget.

The example on the slide compares two people saving $200 a month. One starts at age 29, the other at 39. The person who starts earlier not only saves for 10 more years, but their money also has more time to grow. This results in a much larger savings account compared to the person who waited 10 years to start. So, remember, when it comes to saving, earlier is better!

<On the slide:> Pay yourself first by making regular contributions. Every little bit helps. Assumptions for Rate of return: 29-year old | Saving $200 a month | Starting now instead of in 10 years <End of slide>

<On the slide:> TITLE: Step 5: Keep your finances healthy <End of slide>

Did you know that healthy finances can lead to a healthier you? Money worries in Canada are at an all-time high. With prices going up and basic needs getting harder to afford, it's no surprise people are stressed.

A recent study* shows that money is still the biggest worry for Canadians. The study found that:

• Money stress is causing anxiety, depression, and mental health problems.
• Almost half of Canadians are losing sleep over money worries.

But there's some good news too*. Even though people are still worried about money, they're feeling more hopeful about the future, and are taking steps to improve their financial health and reduce stress.  So, while times are tough, many people are working hard to take control of their finances and feel better about their money situation.

<On the slide:> There is a bar chart that shows money stress, mental health impacts and lost sleep have trended upwards from 2023 to 2024.  But, so has optimism.

*Source: 2024 Financial Stress index: https://www.fpcanada.ca/2024-financial-stress-index) < End of slide>

Part of keeping your finances healthy is protecting your money and identity by being smart about fraud.

Here are some simple tips:

• Be careful with your personal info.
• Don't give out things like passwords or bank details to people who contact you out of the blue.
• Use strong passwords and extra security steps when you can. This makes it harder for scammers to get into your accounts.
• If something seems too good to be true, it probably is.
• Be suspicious of surprise lottery wins or inheritances, especially if they ask for money upfront.
• Do your own research before sending money or personal information to anyone. Look them up yourself instead of clicking on links they send you.
• Keep an eye on your bank and credit card statements. If you see anything weird, report it right away.
• Stay alert and trust your gut.

These simple steps can help keep your money and identity safe.

<On the slide>: A list of 7 common types of fraud:

Phishing

Extortion

Grandparent schemes

Artificial Intelligence

Mail scams

Romance scams

Elder abuse

It also shows a tip: Financial institutions or government agencies will never text or email you asking for passwords, PINs or account numbers. <End of slide>

In addition to growing your money, you may also wish to consider protecting it.  Life can throw unexpected challenges our way, like serious illness or accidents. These can really hurt your finances if you're not prepared. That's where insurance comes in. It's like a safety net for your family's money.

Life insurance helps your loved ones if something happens to you. It can replace your income and cover expenses.

Health insurance is there for big medical bills. It can help with long-term care or serious illnesses, so you don't have to use up your savings.

Disability insurance gives you some income if you can't work due to illness or injury. This helps keep your family afloat financially.

Remember, insurance isn't just an expense – it's protection for your family's future.

<On the slide:> There are three groups of protection:

1. Financial protection: Life insurance.
   a. Term – protection for short-term needs
   b. Permanent – protection for long-term needs
2. Financial protection: Health insurance
   a. Long-term care
   b. Critical illness
   c. Disability
   d. Health & Dental
   e. Accidental death & dismemberment
3. Financial protection: other
   a. Property insurance (house, condo, apartment)
   b. Vehicle insurance
   c. Emergency account
   d. CPP/QPP disability benefit
   e. Workplace coverage

<End of slide>

No matter how old you are or what your family looks like, taking care of your financial health also means thinking ahead. This includes planning what happens after you're gone.  This may include Wills, Power of Attorney Documents, Mandates in the province of Quebec, and beneficiary designations.  Getting these items in order is a smart way to protect yourself and your loved ones.

<On the slide:> TITLE: Have your estate planning in order

Will:

• Instructions on how your estate will be distributed
• Update every 3 to 5 years

Power of attorney:

A legal document that allows another person to act for you

• financial decisions
• health-care decisions

Beneficiary designations:

• Any person (or organization) you name to receive your assets upon your death 
• Review regularly and update as life changes <End of slide>

In summary, how you handle your money matters a lot in life. Getting good with money takes time, but the basic steps are pretty simple. So, what should you do if you’re ready to take action?

First, make a budget and set some savings goals. Build up an emergency fund and think about getting insurance. If your job offers a savings plan, use it as much as you can. Watch out for scams and protect your money. And don't be afraid to ask for help.  Talking to a financial professional can keep you on track and help you reach your goals.

<On the slide:> TITLE: Take Action.  The slide has 4 sections:

Plan

• Assess your current situation
• Set savings goals and priorities
• Create a budget

Protect

• Against fraud
• Emergency savings
• Insurance protection
• Estate documents

Maximize

• Maximize your group plan advantages
• Compound growth – get time on your side

Book

• Book appointment(s) for professional guidance and support
• Banking
• Investments
• Taxation
• Legal

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Thanks for watching. We hope this was helpful and got you thinking about your financial health. Remember, even small steps can make a big difference. So why not start today?

<On the slide:> The information provided is of a general nature and can not be construed as personal financial or legal advice. Neither Sun Life or its affiliates guarantees the accuracy or completeness of any such information. This information should not be acted on without obtaining counsel from your professional advisors, including a lawyer, notary, tax professional, or advisor (registered as Financial Security Advisors in Quebec) as may be applicable to your individual situation.

Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life group of companies.

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