Financial Spring Cleaning

Most of us take the time to give our homes and garages a good clean every once and a
while, so why not do the same with your finances? The tax season provides you with
the chance to evaluate and possibly rethink your financial goals and actions. It can be a
great time to get on the right track for the year ahead.

Here are the top tips for an effective financial spring clean:

Get organized

Before you can work out where your finances are and where you want them to be, you
need to gather all of your financial information. Pull your receipts, bills and tax returns
together in one easily accessible place. These days paperless bank and credit card
statements are the norm, so it is sometimes worth printing out a year’s worth of these
records for your own reference

Conversely, don’t hang on to old financial information for too long or when it is no longer
useful for you. As a general rule of thumb, it is advised that you keep documents
relating to historical tax returns for seven years, but other financial information can
generally be disposed of once you have confidently verified their accuracy.

Create a budget

A clear and realistic budget is the cornerstone of your financial success, For a budget to
work, it must be updated regularly to reflect your changing circumstances. Big life
changes such as a new job, marriage or the purchase of a property can have big effects
on your personal finances and it is crucial to anticipate such changes as far in advance
as possible and plan for them accordingly.
Find creative ways to save and earn

Saving for both the future and any financial emergencies that may arise is integral to
good financial planning. From your budget, work out a realistic amount to save per
month and stick to it – remember that your savings fund will grow with time and provide
you with flexibility and stability if things go wrong. As part of this, you need to carefully
consider your retirement plan and make sure that your RRSP allocations are
appropriate.

There are plenty of other ways to save money if you have the time to go through your
financial records. Your life, homeowner and car insurance policies should be regularly
reviewed to make sure that you are getting the best coverage at the best price. Be sure
to make sure that you are getting the best out of any rewards offered by your lifestyle
choices (for example: air miles or credit card points).

Deal with your debts

Tackling debts like mortgages, credit cards and school loans is one of the best ways to
improve your finances. The most important way to start is by knowing exactly how much
you owe and how much you are paying in interest charges. Once you understand your
debt amounts, do some research to make sure that you are getting the best possible
deals from lenders and are paying the least amount of interest possible. Consider
consolidating your debts.

Once you have readjusted your debts to the lowest possible cost to you, it’s time to
make a realistic plan to chip away at them. Paying off the highest interest debts first will
save you the most in interest charges in the long term, but you may want to consider
that the accomplishment of paying off smaller debts can sometimes motivate you to
continue. It can also save you some money by not having to pay interest on two debts
for as long.
If you are interested in creating a more in-depth plan to clean up your finances, consider
talking to a financial advisor. Their expertise and years of experience can help tailor a
strategy that works for you and your situation.