Summer has come to an end – vacations are over, patio season is no longer and the bills are piling up, it’s time to start your money makeover! September is the perfect month to get back to business according to finance expert Melissa Leong. With a few months left until the end of the tax year, fall makes it easy to get your finances in check before the holiday season arrives.
Set new goals
First things first, there is no need to beat yourself up—revising your overspending is a push to set new attainable goals. A good way to set a benchmark to keep track of your progress is to calculate your net worth. Melissa explains how she calculates this number twice a year, as ideally it should be increasing over time. Don’t let this scare you, if you’re unsure of how to actively grow your net worth, start by creating a financial plan. With the help of an advisor or on your own, outline your financial goals and use your cash flow to see if you are allocating your money to these goals.
Save, save, save
If you’re struggling with putting money aside, don’t sweat it—you’re not alone. However, savings are important for when life sends you those unexpected curveballs. To begin, make your savings invisible and then every pay period set your account to automatically put money aside into a savings or to pay off your debts. You can also set up monthly pre-authorized retirement contributions, which can give you a good return 30 years down the line. As fall is nearing the holidays, savings can help you prepare for the overspending that’s bound to occur. A good rule of thumb: when the holiday decor appears in stores, it’s a sign to begin your preparation for the holiday season.
Make your debts disappear
Firstly, stop using your credit card. Paying off the highest rate card first or the one with the lowest balance can have great practical and psychological advantages. Then, consider consolidating your debs into one low—interest payment such as a line of credit. Being financially prepared for whatever may hit the economy or your life will help you feel more stable and secure.
Don’t push away your taxes
Taxes can be the most daunting time of year, however it’s important to begin prioritizing your taxes moving into the fall, to gain the most benefits. Allocate time to check out the tax credits available to you (i.e. charitable donations, medical expenses, child care etc…) Unfortunately, if you don’t make this payment before the year end, then it won’t qualify. It is also helpful to get your receipts organized while the payments are still fresh in your mind to avoid issues later on. Another reason to think about your taxes early is if you’re planning on taking money out of your tax-free savings. It is better to do so in December than January, as the amount you take out will be added to the contribution room going forward which is the year following the withdrawal. Another helpful tip is to add money into an RESP – the government will top off your annual contribution by 20 per cent which is great for future savings.
Make a will
Although wills are not the best topic of conversation, it is important to make sure it’s up to date. If you haven’t created a will, now is the best time to do so because without one, the government decides who gets everything you own. This leads into life insurance; you should check off the box that you have enough insurance to protect yourself and your loved ones.
Watch the video clip above for more of Melissa’s tips.