Written by Preet Banerjee
Friday, March 24th, 2023
It's that time of year when many Canadians spend an entire weekend spring cleaning their home. It's a chore, but after it's done, they have a sense of accomplishment, and their house looks great, too.
Spring may also be an ideal time for a deep cleaning of your financial house.
Over the past few months, there have been a lot of financial "events" to contend with: the rise of inflation, the possible credit card hangovers into the New Year, general concern about the economy, and finally the RSP contribution deadline.
The next major financial “event" to contend with: getting your receipts together for tax time. And since you have to gather some paperwork together, why not play off that momentum, roll up your sleeves, and give all of your personal finances a once-over?
If you've never put together a detailed list of your expenses, now's a great time to start. These days it's relatively easy, since most transactions we make will show up on a credit card or debit card statement. You just have to access your account history and start categorizing all the money you spend. Often, just the act of adding up expenses for a few months will motivate people to cut their expenses.
You may occasionally think that your subscription services or small price increases don't mean but, but if you add them all up, you may realize you're spending twice as much as you thought.
Pick all the categories that do not align with your budget and see if you can manage a reduction across the board. If you have high interest debt, like a balance on a credit card, set up an automated payment against that debt that's equal to your previous monthly payments, plus whatever new savings you've found.
If you don't have high interest debt, then you can put put any extra money into a savings account or emergency fund. Again, you'll want to automate it using a recurring transfer from your chequing account.
Taking the time to sit down, review your expenses, identify areas that don't align with your budget, and making a plan to revamp your finances is a bit of a chore. But after it's done, you'll have a sense of accomplishment and your financial house will look great.