Cash In on Financial Fitness for the New Year

For most people, the push in the New Year is to set New Year resolutions, and often the focus is on losing weight or earning more money. One goal that I like to advocate is becoming more financially fit and shedding debt that weighs down our energy and bank account. Clarity gives access to action so having an “accounting” of your finances in the New Year is a great way to get a jump on your financial fitness goals. Here are a few simple things that you can do to start a healthy financial plan and cash in on savings in the New Year:

Weigh-in Financially

Go through your bank statements and credit card statements and make a list of where you have spent your money last year. Be specific and break it down into the following categories:

• Investing,
• Fun (short term wants),
• Saving (long term wants),
• Sharing (donations, giving),
• Learning (Education), and
• Living (Necessities)

Also prepare a list of your assets and what debt you have. The more specific you can be then the more clarity you will have around the “roles or jobs” you have your money doing on a day-to-day basis. The biggest thing to understand is whether your money is going towards wants and needs or working hard for you to create short term and long term financial health. Sometimes we are carrying more debt than we realize so having a starting point with a target reduction goal is the first step to creating a functional financial action plan.

Boost Your Financial Immunity by Doing a Credit Check-Up

This is a great time to check your credit reports and see the health of your credit rating/score. This is something that should be done a couple of times a year and you can utilize TransUnion or Equifax for free. You get access to a free credit report once per year so followup to find out if there might be obstacles in your credit rating that will negatively affect the interest rates that you are paying. Routine checking of your credit score ensures that discrepancies are handled sooner than later so that you don't have trouble when trying to apply for new financing.

Utilize the Expertise of a Financial and Tax Coach/Advisor

With all the market swings this past year and the economy in a state of flux, take the time to review and re-balance your investments. Book an appointment with your financial advisor (or get one if you don't have one) and also a tax professional, to ensure you are building your financial immunity for the upcoming year and mitigating your financial risks. Investing time with a financial professional and strategically planning for the New Year can support you in making smart investment decisions. Reviewing your income and deductible expenses with a tax professional can help minimize any potential tax liabilities in the upcoming year, and assist you in being proactive in 2016 to cash in on tax savings.

Avoid Financial Disability and Recovery Stress

Dealing with uncertainty is a common stressor for most individuals, and doing a review of your insurance requirements and ensuring your estate documents, like your will are updated can reduce financial disability in the event of a financial crisis. Also, with your risk managed and financially debilitating events covered, your recovery time and stress will be significantly reduced. Doing this review as you head into the new year is fundamental to managing your financial risk, and ensuring that your “money tree” or assets are protected.

How Do You Measure or Log Your Success?

Ensuring you have a system to pay bills on time and keep track of your finances is a valuable tool to have in place this year. This orderly tracking and managing of your money can eliminate late payment charges, negative consequences to your credit report for late payments, and ensure you are optimally using your cash for the biggest savings. Recording or logging all your expenses in an orderly manner (based upon need vs wants, and type of expense), and reviewing them each month is a necessity to ensure you are on track with your financial fitness plan.

Take time this year to plan, prioritize, and prepare by doing a financial fitness check-up as you head into the new year.

* Featured blog for www.CPACanada.ca 

 

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