Give Your Finances a Spring Cleaning

I love Spring. In most places in Canada actual spring weather comes later than the calendar Vernal Equinox – and this year it seems to really be taking its time. But the flowers are beginning to bloom.  Everything seems fresh and new after spring rains.  And it stays light longer.  It’s time to get out of hibernation and pack away the cold weather wardrobe.

I wouldn’t say Spring time gives me an incredible urge to clean, but I do admit, that fresh-start feeling you get when you fling open the windows and organize and declutter is quite invigorating.

While you may be thinking of spring-cleaning your home and freshening up your wardrobe, it’s also a good time to spruce up your finances.

Here’s some ideas to get you started.

1.  Declutter your wallet

You can start with something easy.  Clean out your purse or wallet.  I don’t know about you but mine get stuffed with receipts, business cards, shopping lists – and empty gum wrappers.

Take a few minutes to dump everything out, clear the clutter, and throw away all the flotsam you don’t need any more.  If you have gift cards, store them neatly with your cash.  You don’t want to forget to use them – they’re free money!

2.  Organize your paperwork

Everybody does it.  We accumulate financial papers and put them in a pile on the desk and tell ourselves we’ll get to it one day soon. 

If you’re still holding on to years-old credit card bills, bank statements and receipts, it’s time to find a shredder and purge.  Too many people keep much more information than they need. 

Create folders for all of your important financial documents – statements, tax returns, important receipts, etc.  You can save everything in hard copy or electronic versions, or both.  Pick your system and get organized.

Take advantage of online services for your bills and bank, investing and credit card statements.  You can look up back statements for several years if you need to.

3.  Consolidate your accounts

Once you’ve purged the paper think about amalgamating your RRSPs, TFSAs and unregistered accounts to one (or at most two) financial institution that you’re happy to deal with. 

Doing this can lower the fees you pay and help you be more streamlined when it comes to making deposits and withdrawals as well as rebalancing your portfolio.

This is also a good time to take a look at your investments.  You want to minimize fees, be tax advantaged and match your risk tolerance.  Talk to your financial advisor or do a bit of research yourself. 

4.  Review your estate plan

While you’re at it make sure your estate plan is up to date.  It’s easy to overlook changes in your family makeup that might make it necessary to make some amendments.  Check beneficiaries on your accounts, insurance policies and your will.  Make the changes now.

Related:  Estate Planning Options for Your TFSA

Just in case the unexpected happens, keep a record of all your accounts and other important documents in a binder or file folder so your close family members or a dear friend have access to everything. 

5.  Spruce up your automated payments

Set aside some time to check your statements for charges and subscriptions.  Quite often people just pay the bill and don’t go through it.

A growing number of businesses have adopted a subscription model – streaming, gym memberships, online newspapers and magazines.  Recurring payments are automatically deducted from your account or credit card. 

Be honest with yourself about the value of your subscriptions.  Do you really need Netflix, Amazon Prime and Crave TV?  Cancel those products and services that are no longer of use to you.

Free trials are great, but not so much when you forget to cancel.  Take note of when they will expire so you’re not automatically charged if you decide not to continue.

6.  Tidy up your digital life

Keep your emails organized and delete or archive what you don’t need.  Create folders or use labels to organize by specific topics.  Unsubscribe from the email lists and newsletters you know you no longer want.

What about all those old accounts you’ve forgotten about.  A service called Deseat.me can help.  It’s free and easy to use.  You can delete all the accounts you don’t use any more.

Let’s not forget your computer’s files.  Start with your Downloads folder.  Is it still holding every image, pdf and document you’ve downloaded since you got your computer?  Is your Documents folder a mile-long list of every file you’ve ever created?

Let’s fix this.

7.  Prepare for next year’s tax bill

Yes, I know you thought you were done with taxes but you should review your tax return, especially last year’s net after-tax income sources.  Determine your top marginal tax rate and look at your income-producing investments.  See if some of your income may be better off as tax-free, or capital gains or dividend income versus ordinary income.

If you are retired, you want both you and your spouse to have two equal incomes rather than one large and one small one.

The bottom line

Spring cleaning is looked forward to by some and dreaded by others.  Regardless, it allows you to review and refresh not only your household, but also your finances. 

Give yourself a time limit (30 minutes to sort email), or a small task to do (clean out one file cabinet drawer) so you don’t become overwhelmed.  Do one step a day until you’ve completed them all.

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