Monday, December 22nd, 2014
With a new year comes the opportunity for a fresh start. But personally, I find it hard to tackle any resolutions before getting my finances in order first. Here are some strategies that have worked for me, and may also help you start off the year on the right financial foot:
Organize your files
I like to think I'm an organized person, but I often find financial documents around my apartment and in random drawers. January is a great time to "clean up" your finances by gathering all your documents together and filing them away, either in an expandable file folder, a filing cabinet, or even on your computer if you're going 100% digital. As I begin to organize and file everything away, I also look at how many financial documents I already have saved and consider what could be removed (and then shredded). If you store everything digitally, you'll probably want to back up your files after everything is organized.
Get ready for tax season
As you're organizing your files, it's a good idea to set aside an envelope or folder with all your tax-related documents and receipts for the upcoming tax season. Even though it may seem like it's far away, the deadline to file always seems to creep up faster than we expect it to. By getting ready for tax season now, you can identify any missing documents you'll need in order to file. The other bonus to being organized is that you can file quickly. If you're expecting a refund, the sooner you file, the sooner you'll get that money back.
Review your bank account and credit products
Another thing you might want to do while organizing your files is review your bank account and credit statements. Are your products still appropriate for your current financial situation? Look for cues in the statements. For example, are the balances in your savings accounts going up, but still earning little-to-no interest? Or are you going over your allotted number of chequing account transactions now and being charged each time you do? What was right for you 5 or 10 years ago may not serve your needs today. Take a look at any products you might want to change, and consider researching new options.
Set your financial goals
Finally, when you're done all of that, consider sitting down and mapping out your savings and debt repayment goals for the year. As you come up with figures you want to reach, make sure they're achievable. For example, if you want to contribute $5,500 to your Tax-Free Savings Account, divide that by 12 and you'll see you need to save $459/month. Is that doable? If not, set a smaller goal. It feels much better to set an achievable goal and reach it, rather than setting a big goal and failing. By doing this, anything you manage to save or pay down over and above your goal will simply feel like a bonus.