Spring Clean Your Finances

Spring has sprung and we’re thinking of all the ways we can Marie Kondo our lives. Cleaning out our closets, deep cleaning all corners of our homes, but what about your finances? Did you ever think that they may need a good spring refresh as well?

Organizing your finances isn’t as difficult as it sounds, plus the beginning of a new season, and nice weather, can be a great time to feel more positive about staying on top of your finances. It’s like a new beginning. Our moods are lifted because the birds are chirping, and we’re ready to set a new round of goals now that winter is over.

Where do you start?

Sweep your weekly habits

Take a long hard look at your daily and weekly habits. We’re often so used to them, that we don’t even notice once that need a major boot to the curb with your bag of donated clothing. A lot of spending happens within your routine. You always go shopping on Saturday’s, Tuesday night date night at your fav restaurant, your morning coffee/tea, or your ever growing Uber bill… “it’s only $5” adds up.

Take a look at your weekly habits. Take a look at every moment you tap that debit card and where your dollars are going. What can change? What can be reevaluated? Something as simple as making your own coffee every money, can save you big!

Reevaluate or create a budget

Let’s talk about budgeting. If you already have a budget, pull it out to reevaluate. If you don’t, it’s time you get yourself one.

You are going to want to look at all your recurring expenses and income (after deductions). If you already have a budget, now is the time to regroup on it. Can things be updated or altered? Have you even looked it all year? How can you get in a better habit of staying on top of it?

Prioritize recurring expenses that are necessities, versus nice-to-haves. Such as rent/mortgage, groceries, heat and electricity, etc.

Once you have the recurring necessary expenses in your budget, evaluate how much you would like to spend on the nice-to-have expenses. Such as eating out, entertainment, shopping, memberships to gyms or other services, etc.

Lastly, one of the most important things is to keep in mind your income that you have coming in. You should be able to breakeven and still have disposable income for other things like an emergency, or unexpected expenses.

Budgets may seem time-consuming, but it’s important that you have a plan in place that tracks your spending and saving habits.

Power through that pile of papers

We’re all guilty for letting our paperwork pile up, especially leading up to tax season. It’s time to take control of it! Here’s how to start to organize that pile of papers that is growing taller than you:

1. For anything related to your tax return, keep this in a safe pile for each taxation year. You’ll thank us for this when tax season comes around.

2. Take a look at what you’re hoarding and what you don’t need to keep. Such as old receipts for things you won’t claim on your taxes, bank statements which you have available online, etc. Shred them, and get rid of them!

3. Look into what you are getting mailed to you regularly and if you can switch to electronic delivery versus paper. This saves the planet, and saves space, and time down the road.

Take a hard look at your debt

Whether it’s student debt, credit card debt, or something else, it’s important to regularly check on the state of your debt to help you better plan a course of action. Spring is the perfect time to regroup on your debt, and take a look at what your next steps are if you’re not staying on track with it.

Here are some steps to get you started:

1. List all of the balances of what you have left to pay off, including interest rates, in a spreadsheet.
2. Determine what the minimum payments (monthly/weekly/quarterly) are.  
3. Deep dive into what you can reasonably afford to put on your debt each month or each paycheck. Also look to see if there are any opportunities to put down larger payments, like say when you get your tax return, or if you know you get money for birthday or christmas gifts.

TIP! If you are swimming in debt from multiple places, you’ll want to look at what debt has the highest interest rate.

Remember, paying off debt is important, especially debt that is costing you more and more money the longer it goes unpaid. So take the change in the season as a time to regroup on your plan of action, and if you don’t already have one, build one.

Tips!

To motivate you to get your finances on track this season, here are some tips that you should keep in mind for how you can make changes in your spending habits, or simply just regroup on your overall financial wealth, debts, and expenses.

Set-up autopayments

If you’re someone who is often paying late fees or interest because you’re too unorganized to stay on top of bill payments, auto-payments are your best friend. Make sure you set-up all your regular bills with auto-payment, and when you’ve done that, take a look at your savings goals too. It can feel like a chore to put money into your savings account(s) each month, and often you’ll easily forget about it and spend the money on something else. Instead, set up auto-withdrawals each paycheck or month that go right into your savings accounts. You don’t even think about it, you easily learn how to live without that money, and before you know it, you’ll start to build up a good amount in your savings account.

Negotiate your bills

You’re probably thinking that you’re getting the best bang for your buck when it comes to things like your phone, internet or insurance each month. Why wouldn’t you be? However, this can be an area you can considerably cut coasts in. Negotiating with your providers may seem like it’s not an option, given their prices are listed right on their websites, but you’ve thought wrong. In fact, ask around to your friends and family and you’ll probably notice almost all of them pay something different for these every day services.

Start by scanning the internet to find the lowest price on your basic everyday services. Then, find the number (or ask for it) for the loyalty line at your service provider. This is completely different than customer service in most cases. The loyalty line will help give you the best deal, and sometimes you may even have an offer waiting on your account that you didn’t even know about. State to them the better deal(s) you’ve found, and see if there’s anything they can do to lower your bill. Even just getting them to look at your usage and see if you’re paying for anything unnecessary can help cut costs.

On top of that, look at what you can cut. Do you have cable you never watch because you watch Netflix all the time? What’s that landline really doing in your apartment when you have a cell phone? Are you paying for added bonuses on your insurance that aren’t relevant to your car? Educate yourself, and talk to the right people to try and lower what you’re loyally paying for.

Sell things you don’t need

People often think of spring cleaning as the time where you clean out your closet, drawers, and scrub everything to death. Since you’re already purging things you don’t need, why not try and get some extra money from it. Use Facebook Marketplace, Kijiji, or have an old fashioned garage sale to not only help clean out your unwanted goods, but also make some added cash to the bank.

Plan for your future

We never know what the future has in store for us, and it’s always a good motto to be prepared for anything. There are some things you can do to help prepare yourself for what’s next. For starters, you should have an emergency fund, which serves as money that will be used for only emergency, unexpected situations. This sounds like a boring thing to save for, but it’s better to be safe than sorry, especially if you have a family to take care of. An emergency fund can help shield you from borrowing money if an emergency strikes unexpectedly and in turn, prevent you from spiraling into debt.

How do you create an emergency fund? Here are some tips:

1. Decide how much you want to save and what’s realistic for you. One of the most popular recommendations is to save three to six months of living expenses.
   
   
2. Look at your monthly expenses, and budget. Knowing your monthly expenses and dividing that by the number of months you are saving for, will help give you a goal to save towards.
   
   
3. Open an account that this money will be stashed in. Determine what is best for you, and make sure the money is easily accessible if you have an emergency strike, but not too accessible that you end up spending it on other things.
   
   
4. Lastly, you’ll want to determine how much you can afford to save each month or pay cheque to pay cheque to get yourself to the number you determined in step two. Even a little bit each month can go a long way.

Another thing to keep in mind is your savings. Ask yourself what you’re saving for, it can be short or long-term, big or small. Retirement, your son’s schooling, or maybe even just your dream vacation. You’ll then want to determine, like above, how much you want to save, and how much is practical for you to put aside each month or paycheck.

It’s also very important to consider the type of account you save this money in. A Tax-Free Savings Account (TFSA), for example, can be a great way to save, but often have strict rules in terms of ever taking that money out. A Registered Retirement Savings Plan (RRSP) may want to be considered if you’re saving for retirement, but again, can be hard to withdrawal from if you’re saving for anything short-term. Talk to your bank, and figure out what makes the most sense for what you’re saving for.

As you can see, there are a ton of things you can do to spring clean your finances.

– Re-evaluate your budget (or create one)
– Take a look at your debt and figure out a game plan
– Organize your paperwork (and life)
– Think through ways to make your life easier like auto-payments
– Find ways to cut costs like negotiating with your service providers, etc.

What are some of your best tips to help clean up your finances heading into summer?

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