It’s incredible how much you can improve your financial situation with just a web browser and an internet connection. From tools like the Financial Consumer Agency of Canada’s Credit Card Payment Calculator to the Government of Canada’s The Money Belt quiz, which tests your knowledge of federal regulations, service charges, and information disclosures, there are plenty of online resources to help you manage your money better.
However, while tools like mortgage calculators, budget trackers, and financial quizzes can assist in getting a grip on your finances, Chad Viminitz, a certified financial planner with RTR Advisory Group in Edmonton, Alberta, and author of “Money Assassins,” cautions against relying on them too heavily. He points out that despite the abundance of financial knowledge and tools available today, people are often making worse financial decisions than ever before.
Thankfully, Viminitz has some practical advice on how to make the most of these online financial tools:
- Hedge Your Bets
Mortgage calculators are great for understanding how changes in interest rates could affect your finances. However, Viminitz suggests that when using these calculators, you should try inputting interest rates that are 2 to 3 percent higher than the current rates. This practice, known as “interest rate risk,” helps you see if your family can handle potential rate increases. It’s a smart way to prepare for the unexpected. - Think Big
There are countless online budget trackers available, many of which can be easily loaded onto your smartphone for on-the-go budgeting. These tools can help you see where your money is going each month, but Viminitz recommends focusing on apps that categorize your expenses. Identifying your major expenditures should be a top priority when trying to get your finances in order. - Think Supplement, Not Substitute
Don’t be too quick to ditch your financial advisor. According to Viminitz, the biggest drawback of these tools is that they don’t offer personalized advice. For example, you might use an amortization calculator to see the costs associated with a $400,000 mortgage, but the real question is whether you should even take out a mortgage that large. Maybe your financial plan only supports a $250,000 mortgage. While these tools can be helpful, they can’t replace the expert guidance a financial advisor provides. - Consider the Source
Since many lending calculators are designed by lenders, it’s essential to be cautious about where you’re getting your numbers from. Viminitz warns that these tools might be more focused on lending you money than on what’s best for your financial plan. To get the most accurate and consistent results, it’s a good idea to try out a variety of calculators.
In summary, while online financial tools can be incredibly helpful, it’s crucial to use them wisely. By following Viminitz’s tips, you can better navigate the world of online financial resources and make decisions that truly benefit your financial future.
