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Why is it that people spend more time buying a new car or planning a vacation than planning for their financial future? Most people know they should play a more active role in managing their finances, but they often don’t know where to start. Understanding the basics is a good place to begin.
For a more comprehensive overview of consumer information check out MoneySmartManitoba.ca.
Three tenets of wise money management
- Know who you are – Everyone has a different idea of what money means to them. It might be personal freedom or a sense of security, or the ability to afford the things they want in life. Whatever it is, it’s important to remember that no one cares more about your money than you. No matter who’s handling your investments, only you will know if you are truly comfortable with the investment choices. It’s up to you to stay on top of your investments and make sure they keep working for you.
- Know your goals -Once you know your personal money values, take a look at the bigger picture. How do you see yourself down the road? Using the S.M.A.R.T. formula, you can set financial goals that are:
- Specific
- Measurable
- Attainable
- Realistic and with a defined
- Timeline
3. Know your risk tolerance -Every investment has some
amount of risk. Knowing your ability to take on risk is
crucial to understanding what types of investments will
work for you. Your tolerance for risk may depend on:
- if you would rather keep your money safe or seek higher growth
- when you need your money
- how you react to the ups and downs of the markets
- if you have any debts
- if you have other sources of income to fall back on