The Butterfly Effect

October 17, 2019 | Posted by: Chad & Patty Southwell

Small changes in time add up to big impact.  It's called the Butterfly Effect, like the caterpillar in a chrysalis, tiny changes in complex systems over time cause huge effects. This applies to everything in life but especially when it comes to your finances.  There are tiny tweaks you can make that barely impact your day to day but add up over the long run. 

The experience of purchasing your first home can be overwhelming.  You don't need to know everything, that's why you hire a professional.  It's helpful to know a few key things that make a big difference.

Here are 3 small things with big impact you can easily do as a first time home buyer:

1. Pay your mortgage on a bi-weekly accelerated schedule.

First off, it's convenient as you can co-ordinate your mortgage payment with your pay schedule.  Instead of one big bill, you divide and conquer with two smaller payments a month.  Secondly, the accelerated payment means you effortlessly make an extra payment each year, paying your mortgage off faster and saving on interest.

2. Pay your property taxes with your mortgage payment.

The bank may or may not require you pay your property taxes with your mortgage payment, but either way it's a good idea.  The bank sets up a tax account for you where you make monthly payments, collected with your mortgage and pays the bill when it's due.  It's actually a great service provided for free that will never leave you scrambling when that bill comes due.   

3. Set up an emergency fund.

Open up a TFSA and have automatic payment made monthly.  Aim to have a minimum of $1000 saved in an emergency fund. A small investment in yourself of $85 a month means you have over $1000 in a year. Call that your peace of mind account! 

Nothing about this is revolutionary or complicated, but it makes a big difference.  Make it simple, but significant!

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