9 Smart Money Moves to Make in 2015

Here are nine financial resolutions for 2015.

| More on:

Now that 2014 is coming to a close, many people are starting to think about New Year resolutions. Most tend to be focused on diet and exercise. However, the end of the year is also a great time to get your financial house in order. Here are nine smart money moves you can make in 2015.

1. Start a budget

What is the one thing that separates the wealthy from the rest of us? Budgeting. According to The Millionaire Next Door, 55% of millionaires track their monthly income and expenses.

That’s because starting a budget is the first step towards getting your financial house in order. After all, if you don’t know where it’s going, then it’s tough to be savvy with your money. Once you have a full picture of your finances, you can start to find more places to save.

2. Pay yourself first

Set aside a portion of your income for savings every month. Do this before you buy groceries. Do this before you pay your mortgage. Do this before you do anything else. This habit, developed early, can help a person build tremendous wealth.

3. Start a rainy-day fund

Stuff happens. A well-stocked rainy day fund can be a lifesaver when the unexpected arises. That’s why personal finance experts recommend keeping at least three to six months of cash on hand.

But don’t let this daunting figure get you down. Start small, and work your way up. In the meantime, even having a few hundred dollars stashed away can make a big difference in a financial pinch.

4. Pay off high-interest debt

If you have any high-interest debt, then make it a priority to pay down those balances. Frankly, this may be the best investment you can ever make.

You won’t hear words like guaranteed and sure-thing thrown around often in the financial media. However, it’s safe to say that with credit card rates hanging around 20%, no other investment offers a better guaranteed rate of return than paying off this debt.

5. Pay your mortgage weekly

One decision every homeowner makes is how frequently to make your mortgage payments. And with constant demands on our cash flow, most of us want the most convenient option possible. That usually means making a mortgage payment once a month.

However, switching to a weekly or bi-weekly schedule can be a smarter strategy. It might sound too simple. But by making more frequent payments, you could save thousands of dollars in interest and own your home years sooner.

6. Start investing

The numbers are clear: over the long haul, there’s no better place to park your money than equities. If you don’t know where to start, I recommend investigating exchange traded funds. In a nutshell, these securities track an index, a commodity or a basket of assets, but trade like a stock on an exchange.

My personal favourite is the iShares S&P/TSX Capped Composite Index Fund (TSX: XIC). In one transaction you can own the 300 largest publicly traded companies in Canada. Better yet, the fund carries an expense ratio of just 0.05%, far lower than your average mutual fund.

7. Buy your first stock

Every journey begins with a single step. The same applies to investing. And what better way to get started then by buying a single share of your favourite stock?

Follow it. Get to know it. Read the annual reports. This one share will teach you a lot about investing.

8. Invest in real estate

Getting rich in real estate is simple — buy a few properties, take care of your tenants, and pay off the mortgages. In 20 years or less, you will have built a family dynasty that can last generations.

However, becoming a landlord is not for everybody. That’s why you should consider buying RioCan Real Estate Investment Trust (TSX: REI.UN), one of the largest property owners in the country. If you live in Canada, you have probably visited many of the firm’s malls and shopping center. By becoming a partner with this firm, you get all the perks of owning rental properties… without the headaches.

 9. Own bonds

In spite of today’s ultra-low interest rates, every portfolio should have a little bit of fixed income. Not every investor can stomach the ups and downs that come with owning common stocks. And the next time stock markets sell off, you’ll be glad you had some bonds in your portfolio.

Once again, for new investors, exchange traded funds such as the iShares Canadian Universe Bond Index ETF (TSX: XBB) are the best place to start. With a click of the mouse, you can own a portfolio of safe government and corporate bonds. And with an expense ratio less than 0.33%, this ETF is cheaper than most mutual funds.

Fool contributor Robert Baillieul owns shares of iSHARES CAPPED COMP INDEX FUND.

More on Investing

A worker drinks out of a mug in an office.
Investing

3 Undervalued Canadian Stocks to Buy Immediately

Snatch up high-quality, underperforming, and undervalued Canadian stocks, such as BCE, to generate real long-term wealth.

Read more »

boy in bowtie and glasses gives positive thumbs up
Dividend Stocks

My Top Pick for Immediate Income? This 7.6% Dividend Stock

Slate Grocery REIT is an impressive high-yield option for investors seeking reliable income from defensive retail.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

CRA: How to Use Your TFSA Contribution Limit in 2026

After understanding the CRA thresholds, the next step is to learn the core strategies in using your TFSA contribution limit…

Read more »

diversification and asset allocation are crucial investing concepts
Dividend Stocks

9.3% Dividend Yield: Buy This Top-Notch Dividend Stock in Bulk

This dividend stock trades at a discount of about 15% and offers a 9.3% dividend yield for now.

Read more »

stock chart
Investing

All-Weather TSX Stocks for Every Market Climate

Given their resilient business model and attractive growth prospects, these two all-weather TSX stocks would be excellent additions to your…

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

How to Use Your TFSA to Average $2400 Per Year in Tax-Free Passive Income

Income-seeking investors should consider these picks to build a tax-free passive portfolio with some of the best Canadian dividend stocks…

Read more »

man in suit looks at a computer with an anxious expression
Dividend Stocks

Where I’d Put $10,000 in Canadian Stocks Right Now

A $10,000 market position spread across three reliable dividend payers is a strategic shield against ongoing volatility.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

1 Undervalued Canadian Stock Quietly Gearing Up for 2026

Let's dive into why Suncor (TSX:SU) looks like one of the top no-brainer picks for investors looking for a mix…

Read more »