The New Year is fresh in our minds, and now is the perfect time to review finances and prepare for a successful year ahead.
It is essential to take a holistic approach when preparing your finances, covering both short-term and long-term goals. Whether you are looking to save more money, reduce debt, or make investments, having a plan in place will help ensure that you stay on track throughout the year.
So let’s take a quick look at how you can get your financial life in order this year:
1. Organize and file paperwork
Unfortunately, banks and governments like originals — that means there are usually a few pieces of paper you have to have kickin’ around for a few years (or more). The hope is that you never have to access that paperwork to verify it. But, if you do, you don’t want to be digging through shoeboxes to find it, should you need it.
With that in mind, get your paperwork organized and filed. A small filing cabinet in your house for the must-have papers or even an organized digital filing system should do just nicely. Make sure you’ve done the research, figured out what you needed to keep and have it well-organized in a system that’s
2. Review debt
Taking control of your finances means knowing what debt you have.
It can be overwhelming to figure it out what debt you have between things like loans and credit card payments, but it’s a big part of understanding your finances.
Make a list of all your debts and divide them into categories such as
- Low-interest rate loans
- High-interest rate loans
- Fixed or variable rates
Once you know how much you owe, it’s easier to make a plan to pay it off. Consider setting up a repayment plan so that each month some amount goes towards paying down your debt.
3. Create a budget
Creating a budget is an important step to take if you want to reach your financial goals. Not only does it help you plan for expenses and long-term savings goals, it gives you a roadmap to stay on track. Developing an effective budget can help you reach those goals and make sure that your spending aligns with what’s important to you (and your future).
Start by tracking all of your income sources and expenses so that everything is accounted for. Then decide on how much of each paycheck should be assigned to the different categories. Make sure that the percentage assigned to each category will fit into your overall finances. It may also be helpful to use an online budgeting tool or software app in order to make the process easier and quicker.
4. Prepare for tax season
As soon as the new year hits, tax season is upon us. It can be a stressful time for many, but it doesn’t have to be so daunting if you start preparing ahead of time.
Start by gathering all relevant information that could affect your tax return, and put them in a safe place. This helps ensure you don’t miss anything when you file.
Next, seek out a professional if your taxes are more complex then you want to handle, or even a piece of software to make it easier. Tax season is easier, faster, and less stressful if you plan ahead!
5. Track your home value
If you own a home, it has value. But how much depends on a number of factors.
Knowing your home value is important because it can:
- Let you know how much you can afford for a new home (if you want one)
- Figure out whether or not you can take out a home-secured loan (if you need to)
- Help you to plan for a future sale by determining what improvements to make
- Budget your property tax expenses (as they’re based on the home’s value)
- Look at listings of recently sold homes in your area
- Research data on both homes and neighbourhood features to get an idea
If you’re not already tracking your finances, getting started today will make a big difference in your future (when you’re ready to use it!).