Monday, April 16, 2018
Start Your Financial Spring Cleaning
We are now entering the third week of April and although Spring has officially been here for almost a month, in Canada, winter is trying to hold on. Despite this, warm weather will be here soon and with that comes sun, fun, and frolicking. Now is the perfect time to get your finances in order before outdoor patio season and camping get in the way. Today I will show you 10 small tasks you can do to get financially fit this spring. Let’s get the ship pointed in the right direction to make this summer the best one yet.
1) Get organized, de-clutter
Come tax time most of us look around and see a massive pile of all the paper bills and statements that have come in all year. Do you have an office desk at home that looks like a nuclear bomb hit it? Take this time to organize your home office or desk or shoebox where you keep all of your statements. If you do not use electronic statements, consider switching over. If you do have most of your statements coming in via email, organize your inbox so everything is easy to find. Getting this done will help you be able to find things when it comes time to do your taxes or even dispute a charge.
2) Get ready for April 2019
Now that you have filed your taxes for the year, you have a good idea of what you needed and maybe what you have missed for 2017. While you still have the momentum, take this time to get a system in place for next years taxes. This includes hammering out what deductions you missed out on, organizing the ones you do use, and keeping your pay statements in order. A file folder system that you can easily put pay stubs in as they come in works great. Also, a miscellaneous folder that houses all the Government statements that come in is important. Sometimes we don’t know what a certain statement means, we just know we should probably keep it. Make sure they are collected in an organized fashion over the course of the year, so you are ready for next April.
3) Go over your bank statements
Most of us throw our bank statements in a pile or even in the recycling bin. You should go over your bank statements. There are two reasons why doing this will help. Firstly, I know my bank always loves to throw in a fee here and there that are either unknown to me, or a mistake by them. If you are not checking your statements regularly then you won’t know when this occurs. There are also mistakes that might happen with some of the automatic withdrawals you have as well, so it is important to be on top of that. Secondly, it will give you a good idea of what you spend your money on every month. Chances are there is some stuff written in those statements that will make you a little upset with yourself. While it only takes about 3 minutes to go over the month’s purchases, it will give you amazing insight into what you waste your money on.
4) Get rid of waste
While you have taken the time to go over your bank statements, look and see if there is recurring junk that exists. Some items may include unused memberships, home phone, cable TV, subscriptions and countless other items that we all sign up for on a whim. I challenge you to find $100 of hidden nonsense you have coming out of your accounts every month. Spring clean that waste and get it out of your life once and for all. Many of these subscriptions rely on dormant accounts and some even continue charging people even after they are dead. Don’t be the reason People Magazine still exists.
5) Go over your investments, or start investing
Now is a perfect time to go over your investments. You have just contributed to your RRSP, hopefully, and seeing where your money sits is an important task. Have your funds grown as you would like them to? Did the recent market fluctuations freak you out? Have your funds not grown or lost at all? If they haven’t that means you don’t really have exposure to the market. Is that okay with you? You may be confused but embrace that confusion. Take the time to understand your own situation and see if you can up your contribution. If you haven’t started investing yet, consider a small contribution to a tax-free savings account. It will get the ball rolling on what will be necessary throughout your life, investing for the future.
6) Review insurance coverage
You wouldn’t believe how many people I have met that are wasting money on insurance. By wasting money I mean they are spending far too much on it. Are you getting the best rate on your home and auto insurance? Do you have crappy mortgage insurance or cheaper personally owned coverage? Is your personal coverage outdated and needs to be refreshed at a lower rate? Do you have creditor insurance attached to your loans and credit cards that is costing you a small fortune every month? I guarantee that if you spend a couple hours reviewing all your coverage you will find gaps. Banks try to make insurance confusing because when you are confused, you waste more money. Insurance is simple. If there is a need, cover it with cost-effective coverage. If there is no need, get rid of it. If covering the need is too expensive or doesn’t provide the coverage it claims, get rid of it. Let’s get back to basics here people.
7) Debt dumpster fires
We all know how I feel about debt. If you have it, don’t kick yourself, but also don’t ignore it. While I hate credit card debt, some cards worse than others. Obviously, if you have credit cards with 19-23% interest rates, that is absolute trash and needs to go. Consider a balance transfer to a lower rate card. These transfer often only offer the lower rate for a limited time, say 6 months, so use that time to aggressively get that balance down. You can also try to negotiate a lower rate from your credit card company. Threaten to move the balance elsewhere and they should budge. I mentioned balance protection in the last point, sometimes that coverage costs over $200 a month! If you have a credit card with 15K on it and every month you are paying $200 for balance protection, you messed up. Consider personal coverage to fill that gap and get rid of that extra cost. You can pay pennies on the dollar to accomplish the same thing. Take this time to organize your debts and come up with a plan of attack. Starting now can make January 2019 look a lot rosier. Remember, debt is big business and many people don’t notice 50-dollar charges when they have a large debt balance. The banks will bleed you dry, so get ahead of that.
8) Create a budget
When you went over your statements did you notice a lot of garbage on there? Take this time to create a livable, yet aggressive budget that will help you save money every month. I give myself a cash diet for walking around money. This is for the random coffee’s, lunches and other things I spend on during the week. If you have “Swipe-itis,” meaning you put everything on plastic, you need to cure that with an all-cash diet. See where you are wasting money and direct those funds to something more productive. If you need help, feel free to email me at firstname.lastname@example.org to get your budget worksheets. Having a budget will change your life, believe me.
9) Review retirement
One of the fundamental principles I run my advisory practice on is saving for retirement. The reason why this important to me is because if you rely on the government to cover you in retirement, you will be poor. That’s a fact. Take some time now to review your retirement plan. See if you are on track or if you have fallen behind. If you are younger, start thinking about what retirement means to you. Do you want to work forever? Have you saved a cent for it yet? One thing everyone needs to understand is that either you choose what retirement you want to have, or it gets chosen for you. That is another fact. Saving money for retirement is what gives you that choice so have it in the back of your mind at all times.
10) Review your credit report
Periodically you should review your credit report. This is important for several reasons. You need to stay on top of identity theft. If your credit score drops dramatically for no reason, it could mean someone has stolen your identity and done some damage. Also, knowing what your credit score is will help you see how attractive a borrower you are. While I do not advocate borrowing often, I do know it is a necessary evil in some cases. When it comes time to buy a home or take advantage of an opportunity like opening a small business, having a good credit score will allow you to get the best rate. Allowing your score to slip because of late payments or bad practices could hurt you in the long run and cost you money. While having a good credit score does not mean you are financially fit, it is a good indicator of how prudent you are with bills. Keeping it clean should come with ease.
A financial spring cleaning should come quarterly or semi-annually at the very least. Take the time now to organize your situation so that when you do go to make some changes, you have everything you need at your fingertips. Enjoy the freezing rain and sleet today Canada. Love that spring weather!
“Tax time is the perfect opportunity to jumpstart your spring-cleaning by tackling your financial to-do list.” – Alexa Von Tobel
Email – email@example.com