Spring is a time of renewal and change, and what better way to ring in the season than with a good spring cleaning? Think more specific than just your home though; chances are your personal finances could use some attention too. A good “clean” could save you hundreds of dollars!
Step 1 – Collect & Categorize
Do you ever consider how much time we waste looking for lost receipts or warranties? How many times have you opened that junk drawer and swore that you’d find it sooner or later? Now think about all the money wasted on late payments due to lost bills or items you couldn’t return because you couldn’t find the receipt. Wouldn’t it be great if you knew exactly where to find all those important papers without even having to think about it? Start by collecting all those loose bills and receipts that you’ve stuffed and stashed throughout the year. Don’t forget the junk drawers and that stack in the front hallway or the cupboards.
Step 2 – Cleanup
Now that you’ve collected everything, it’s time to decide what to throw away. ATM receipts can be tossed after one month, but tax claims should be kept for six years. Keep in mind that old papers, especially financial documents, contain your personal information. The best way to dispose of secure documents is by shredding them.
Step 3 – Catalogue
Once you’ve decided what to keep, divide the remaining paperwork into piles. Evaluate your current system (or lack of one) and decide on a method that works best for you.
Start by finding a convenient, central location where you can keep everything. Create separate files for chequing and savings accounts, credit card debt, household accounts (cell phone, cable, internet, etc.), insurance, RRSPs and investments, tax returns, and miscellaneous receipts. Invest in a filing cabinet or a portable file box for your home or office. You may even want to buy one of those small receipt filing folders for your car, for filing on-the-go. These are all available at any office supply store.
Organize your paperwork by year. Once you’ve calculated and organized your bills and receipts for the previous year, store them somewhere safe and dry in case you need them in the future.
If you own your own business, remember that you will have more bills and receipts to file monthly. If you’re one of those people who just shoves all your receipts into a box and passes it on to your accountant, you could always ask them how they would like your paperwork to be organized. This could save you money come tax time.
Step 4 – Consolidate
If you have a hard time keeping track of all your bills and payments, think about how you can simplify and organize all of your accounts. Consider email delivery for all bills and send them to a specific folder in your inbox. You’ll never have to worry about misplacing a bill again and the possibility of late-payment fees.
Step 5 – Compare & Contrast
As you are filing and purging, look for ways to save money. Compare interest rates, annual fees, and billing cycles. Scan your statements. Are you paying unnecessary fees? Do a credit check and come up with a solid plan to improve your rating, if necessary. Consider the following:
- Evaluate your current plan. Do you find yourself constantly going over your data, or using long distance minutes or texts? This is where cell phone companies make their money. Make sure you have a plan that fits your lifestyle. Give your carrier a call and ask about better packages and lower rates.
- Ask about bundling with other utilities like internet or TV, or combining accounts with family members. Some carriers may offer a discount if you’re buying more than one product from them.
- Check your limits. How much is available on each card? Make sure none of your cards are used over 50 per cent of the utilization amount. This looks really bad on a credit report.
- Come up with a payment plan and start paying off those cards with the highest interest rates first. Are the interest rates on one of your cards much lower than on another? If you find a card with a significantly lower interest rate, or a 0% balance transfer card, consider making the bulk of your payments on that one.
- Find a card that rewards you for your lifestyle. Do you frequently drive far distances? Or travel a lot? Compare cards to see if you can can gain travel rewards or receive cash back for gas or groceries. But beware of high annual fees and interest rates.
- Go paperless and reduce clutter.
- Set up automatic bill payments so that you’re never late on payments again.
- Make sure you’re getting the most out of your savings. Compare interest rates to see how competitive your rates are or set up an appointment with your bank advisor to review your finances.
- Could you be saving on your mortgage? Shop around and compare mortgage rates. Sign up for rate and payments alerts – rates change all the time. Don’t get caught paying a higher rate when a little work could save you thousands.
- If your insurance company’s rates are becoming too high, you are not obligated to stick with them, contrary to what you might think. Use a comparison site to compare and shop around for better car and home insurance Pay attention to what your rate covers and make sure that you’re getting the most for your money.
“Spring cleaning” your finances isn’t just about making neat little piles and shredding documents – it’s about making the whole financial process organized, quick and efficient, and ensuring you never miss a payment again. Not only will you be re-evaluating your expenses, you’ll be cutting out unnecessary costs and, most importantly, saving money!