Spring cleaning your finances

Spring cleaning your finances

I HATE spring cleaning! There’s just too much to do. Have you heard of hoarding? I actually do the opposite; I throw everything away even if I might use it in the future.

But let’s not talk about the things that provide fodder for my psychiatrist, I want to put out a plan for Financial Spring cleaning.

So go to your home office or file box and the first thing you want to do is pour yourself a drink…

Now we’ll get onto the finances,

  1. Get all of your files, bills, records, and pay stubs in the same place. Organize them in a way that makes sense to you. Most people will sort them into file folders, chronologically. You may want to use different coloured file folders for each type. I use green for my paycheques (cha-ching!) and red for debt (bad!). This will allow you to have all of your important information in one convenient place, no more looking for bills in the couch or ruined pay stubs in the dryer. Make sure you are only keeping records for their required retention period.
  2. Do a net worth statement. A new worth statement can be a very valuable tool in determining your financial fitness. It gives you a little report card of your finances that can be compared year to year. List everything that you own with value of $1000 or more (beer can collection probably doesn’t count). Now list everything you owe (credit cards, Lines of Credit, Mortgage). Simply take: What I own - What I owe = Net Worth
  3. Resist the urge to pour yourself another drink
  4. Now would be a good time to review your insurance policies. Do you have adequate coverage? Maybe you can get a better rate? Do some shopping, it doesn’t cost anything to get some quotes and might save you money in the long run. Insurance can be a very valuable tool to cover you and your belongings just in case Murphy’s Law comes a’ knockin.
  5. Get your credit report. A credit report is not only a good way to see how creditors rate your lending worthiness but to check for fraud. There are 2 major credit bureaus in Canada Equifax and Transunion. All for the price of a stamp you can fill out a form, photocopy 2 pieces of government ID, send it in to EACH bureau and in 7-10 business days get a copy of your credit report.
  6. Review and update your budget. (Hint: if you don’t have one, now’s the time) List all of your sources of income and expenses. How do they compare. Do you spend more or less than you earn? If the answer is yes, you might need to rework it. Use pencil!
  7. List your debts, interest rates and minimum payments. You can find a free debt repayment calculator at Cnnmoney, or come in to see one of our qualified counsellors to discuss your options.
  8. And last but not least savings. What are your dreams? Your goals? Upcoming events for the next year? List some short term, medium term and long term goals. How much will you need to save? Maybe you can’t buy that super awesome 1:16 Millennium Falcon off Ebay right now, but can you over the next 10 months?
  9. Your finished! Put your feet up and relax, you will feel a sense of accomplishment and thank the stars you only have to do this once a year… now to the house…or another drink!

 

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