As the season of gifting and celebrating comes to a close, many people start thinking about doing things differently in the new year. Common resolutions range from going to the gym more often to tackling something you’ve never tried before – but how often do we make resolutions and set goals to do with our personal finances?
We’ve compiled some simple new year’s tasks to help you get organized and be smart with your money in 2015.
Conduct a personal financial audit: Do you know the balance of your RRSP account? Do you have bank accounts or investments with multiple financial institutions? If so, which ones? Were there major life changes in the last year that caused you to change your address or last name? Are those reflected in your account statements?
You can’t know if you need to make any changes until you know the facts of your current situation. January is a perfect time to take stock of all of your bank accounts and investments. Check to see how well your investments are doing and see if there is a need to reallocate your money. If you have multiple accounts with different financial institutions, think about how often you use them all and the purposes they are serving. You may find that some accounts could be closed or combined – simplifying your finances makes them easier to manage overall, according to Forbes.com’s 7 Financial New Year’s Resolutions You’ll Actually Keep.
Depending on your financial knowledge, January may also be a good time to review your investments with a financial adviser to make sure that your hard-earned money is invested in a manner that suits your lifestyle and goals (both long- and short-term). For more information on what a financial adviser can do for you and what to look for, see Working with a financial adviser and Questions to ask when choosing a financial adviser.
If you are new to the investing world, consider taking a local class such as Mount Royal University or Metro Continuing Education’s The Basics of Investing. It’s never a bad idea to make sure you’re investing wisely and safely.
Budget for the future: What are your short- and long-term financial goals? Creating a budget can help you visualize exactly how much money is coming in/going out each month. Once you know these numbers you can allot an appropriate amount to be put towards savings. A good tip is to pay yourself first. Make your first payment every month is into your own savings account. If you wait to pay yourself, it’s more likely that you will spend the money elsewhere.
If you don’t already have a savings account, now is the time to get one. Whether the end goal is a trip to Hawaii or for retirement, it is never too early to have a savings plan. You may not know what the future holds, but you won’t regret having money in the bank when you get there. Which brings us to our next task:
Plan for the unexpected: Do you have money set aside for a rainy day? Setting up an emergency fund (separate from savings) is a smart way to handle unexpected financial setbacks. What if your car suddenly breaks down or your furnace needs to be replaced in the dead of winter? If you’re prepared, these bumps in the road can be easily navigated without causing you financial stress.
Finding a Financial Adviser
Investing Basics: Getting started