KEY TAKEAWAYS
✔ Cleaning up your finances is a lot like spring cleaning your home. You just need to know where to start.
✔ A good clean-up often helps people identify bad money habits that are easy to eliminate.
✔ Tidying up your money can often help you find savings and ways to make life better for you and your family.
What does it mean to spring clean your finances? You know what it means to tidy up your home. That’s easy—you get rid of the stuff you don’t need and the things that don’t make you happy. You open the window and you let the fresh air blow through.
Cleaning up your finances is not that different.
There are lots of things you can do to simplify your life, cut some expenses, and make things easier for your family members.
Throw away one bad habit (or two)
Bad money habits come in all shapes and sizes. Sometimes, you don’t even know you're doing something that can hurt your finances because it feels ordinary. Ordering in when you don’t feel like cooking is a normal thing to do but the cost adds up when you do it often, especially in these times of rising costs and adding in a tip which can be as much as 18 per cent.
The clean-up tip: Have something in the freezer for the nights when you don’t feel like cooking. No delivery fee. No taxes. No tipping. Lots of saving. Learn more about kicking bad money habits.
Unsubscribe to a few things
If you’re thinking about cancelling one of your household subscriptions, you’re not alone. A lot of people are feeling the financial fatigue of monthly payments for things that aren’t that important. A survey by the Angus Reid Institute found that one-in-three Canadians cancelled at least one subscription in 2022.
The clean-up tip: On your own, or as a family, agree to cancel at least one subscription to a publication or a streaming service. On the same day, set up an automatic transfer for the same amount to a savings account. A year from now, you can decide what to do with all the money you’ve saved.
Review your accounts
Most people don’t know how much their bank charges for basic things like a chequing and savings account or a credit card. And the additional charges for the occasional overdraft or using the ATM a few too many times can go unnoticed if you’re not expecting them.
The clean-up tip: Look through your statements, go online, or pop into your local bank branch and get a handle on what you pay every year for basic banking services. Ask your bank to figure out a solution if it’s more than you’d like.
Consolidate debt
If you have debt scattered about on credit cards, loans or lines of credit, this could be the time to consolidate your debt into one amount, with one monthly payment. Having all of your debt in one place can make it easier to manage and help you stay focused on paying it off because you can see your progress month by month.
The clean-up tip: Use a debt consolidation calculator to determine if you could save some money or make it easier to manage your debt.
Get some tax advice
Springtime is when Canadians file their income tax returns. The deadline is April 30th. If you’ve already filed, and you’re expecting a tax refund, how will you spend it? Can you use all or some of your tax return to pay down debt or should you reinvest it for the future?
If you’re not expecting a tax return, now is a good time to think about your budget for the new year. Maybe you could take the money you save by cutting out bad habits or ditching a few subscriptions and invest it in ways that will create a tax refund next year.
The clean-up tip: If tax planning is not your favourite thing to do (and that’s true for most people), ask your bank or a knowledgeable friend for advice. If you have access to an accountant or someone in the payroll department where you work, they can also be a great source of money-saving ideas.
Know where your money goes
Write it down, track it and review. This is the essence of a budget. It doesn’t need fancy software or a lot of time. Write down your monthly expenses (debts, bills, living expenses) and how much money you make. Then track these monthly to understand if more money is coming in than going out. And don’t forget to review it every month or two. A budget calculator is a great place to start.
The clean-up tip: To make sure you take the time to review your budget, simply set a reminder every month for you to look at how your budget is tracking. That way you never forget or make plans during that time.
Where to start
Pick one item on your spring-cleaning list and get started. If you need help, from your bank, an accountant or a friend, setting a date in the calendar is a good way to start. What matters most is that you take a little time and have some fun planning ways to create a better financial future. For more ideas, see “Smart money habits you can build fast.”
Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.
