Updated for 2020!
Spring is on the horizon, the trees are starting to come alive, and flowers are going to bloom. Forget the lingering winter temperatures (and snow), all is well with the world again!
You may not know this, but sometimes I feel like I’m supposed to be a poet! 😉
As you come out of hibernation and start planning to clean up your house and yard, consider spring cleaning your finances as well.
Here are a few suggestions for your financial spring clean-up this 2020:
If you have waited till spring to file your taxes, it’s time to get off your butt and send in your tax return.
For most Canadians, the deadline for income tax and benefit returns for the 2019 tax year is on April 30, 2020. For our neighbours down south (U.S.), the filing deadline is also April 15, 2020. Self-employed individuals in Canada have until June 15, 2020.
If you file your taxes late and have a balance owing to the government, you will be hit with a penalty fee that’s equal to 5% of taxes you owe plus an additional 1% for every month your return is late, up to a year.
If you consistently file your taxes late, your penalty fee almost doubles.
If you are a freelancer, here are some expenses you can deduct when filing your taxes.
Open a CRA My Account to easily track your refund, benefits, and update your personal information.
Tax time is also a good time to look closely at your withholding. If you are getting a large tax refund, you should consider adjusting your taxes withheld at the source to limit the interest-free loan you are providing to the government.
To maximize your tax refunds, consider using TurboTax to file your tax return.
2. Review Your Debt
Take a closer look at your debts and review your plan for debt freedom.
Categorize your debt into high and low-interest and consider paying off high-interest debt (e.g. credit cards) first. If you have lots of credit card debt, spring is a good time to consider consolidating them and obtaining a much cheaper balance transfer credit card, line of credit, or personal loan.
Not all debt is bad. For example, you may have taken out a loan for a mortgage, to beef up your retirement accounts, or to fund a business venture.
Eliminate your high-interest debt and manage your other debts responsibly!
3. Review Your Budget
Budgets are great at helping you reach your financial goals. Think of your budget as a ‘living’ thing that needs updating regularly.
Changes in your life situation such as a new kid, home, job, may require changes to your spending. Compare your income vs. expenses and what’s left-over.
- Will this get you to your financial goals?
- Do you need to increase income?
- Do you need to reduce expenses?
- How much per month needs to go to savings or emergency funds? Investing?
These are some of the questions you can answer through your budgeting process.
Need a budgeting app? Try Mint or YNAB.
4. Audit Your Spending
In addition to making a budget, you should audit where and how your money is being spent. I generally prefer to earn more money and not have to squeeze a cent here and there, but sometimes, cutting expenses is the easier/only option.
Take a look at your expenses over the last year and identify areas where savings could be made.
For instance, are there subscriptions you could cancel – magazines you never read, gym membership you do not use, expensive cable service you can downgrade?
Tracking your spending on an ongoing basis makes auditing and keeping to your budget a breeze.
Some useful personal finance apps/tools for budgeting and tracking your expenses include:
Paytm (Canada): Pay your bills and earn cash back while doing so. You can access all your bills in one place, get due dates, reminders, use multiple payment methods, and send money to friends and family across Canada for free.
With the Paytm app, you get rewarded for paying your bills and when you introduce friends to the app and they use your referral code, you both get rewarded. For example, if you use my referral code PTM2477287 when you sign-up, you and I each get $10 in rewards. WIN-WIN! Even better, the app is FREE.
Trim (U.S.): This app audits your spending automatically, cancels old and unused subscriptions, negotiates a lower utility bill and insurance on your behalf, automates your savings, pays off debt, and more.
Mint: This budget app helps you create budgets, track and pay bills, connect all your bank accounts, get alerts for unusual spending, and essentially manage all your finances in one place.
5. Automate Savings, Investing, and Bill payments
Good intentions (of saving, investing and paying your bills) are not enough and your memory may not always serve you well.
To meet your savings and investing goals, automate the withdrawals from your bank accounts and you won’t need to remember. 🙂
Consider scheduling withdrawals to align with your paydays, so your automated payments do not bounce and leave you stuck with another bill!
Automatic savings apps you should consider include:
Mylo (Canada): This app automatically saves and invests your spare change in a personalized and diversified portfolio using low-cost ETFs. This is one way to build wealth without any radical changes to your lifestyle. Sign up and receive a $5 bonus.
Wealthsimple (Canada and the U.S.): Automate your investing with one of the most popular robo-advisors. You can invest up to $10,000 FREE here.
KOHO (Canada): This app offers you a new way to bank. You earn cash back on all your debit purchases, save automatically, and pay no monthly bank fees. Sign up here and enter the promo code CASHBACK for an extra 1% in cash back for 90 days.
Digit (U.S.): This app analyzes your spending and automatically saves the perfect amount every day so you can meet your financial goals stress-free. Sign up here!
6. Monitor Your Credit Score
Cyber thieves are always on the prowl looking to steal your identity and money. To stop them, you need to continually ensure you are protecting your personal and financial information.
Monitor your credit score and report free of charge and watch out for any red flags on your credit profile. If someone obtains a credit facility (e.g. credit card, loan, line of credit) in your name, it should show up on your credit report and your credit score normally takes a hit.
Checking your credit score literally takes five minutes or less of your time.
PIN For Later!
7. Organize Your Finances
There is no better time to organize your finances than springtime.
Do you have all those bank statements, bills, receipts, you received over the last year all jumbled together? It’s time to put them in order so you can easily access specific documents when needed, and not miss important deadlines. You may also need them for your tax return filing.
If you don’t have a filing cabinet, consider purchasing one.
Have paperwork that’s no longer useful? Shred them and reduce the clutter. Consider switching to paperless statements and bills.
8. Review Your Investments
What’s going on with your investments? “Buy and Hold” is great advice, but you should still take a look at your investment portfolio at least once every year to ensure all is well.
- What’s your portfolio performance?
- Do you need to consolidate investment accounts for efficiency, less paperwork, and lower fees?
- What investment fees are you paying?
- When last did you review your asset allocation?
- Do you need to re-balance your portfolio?
- Is your risk tolerance unchanged?
- What’s your investing time horizon?
- Have you opened an RESP account for Canadians or a 529 plan for Americans?
- Are you maximizing free government contributions to your kid’s college education savings plan?
9. Revisit Your Retirement Plans
Take a closer look at your retirement accounts including RRSP, TFSA, Workplace pensions – for Canadians; IRA, Roth IRA, 401(k) – for Americans.
- Are you maxing out your contributions to employer-sponsored pension plans?
- What’s your contribution room?
- How much contribution room do you have left?
Do you have retirement goals?
- What dates are important to your retirement planning journey?
- Where’s your current position in the context of your retirement income/savings goals?
- What’s your net worth as of today?
10. Review Your Insurance
People obtain insurance and then totally forget about it. Or they don’t get insurance when they should.
Need Life Insurance? Compare the best life insurance rates for free using PolicyMe.
Your home or life insurance needs updating every once in a while. Have you had recent home renovations or significant life events that impact your current policies?
For home insurance, remember to document your possessions so you have proof if needed for a claim. The encircleapp is useful for inventorizing your home and valuables assets.
If you have had no home insurance claims for some years, ask your insurer for a discount when renewing, or shop around for better rates.
Looking at making some money on the side this spring? Check out the following options for getting cash back on your spending!
1. Swagbucks (US, Canada, UK): Earn $200/month for taking surveys, shopping online, and completing other tasks. Join Swagbucks and Get a $5 bonus.
2. Checkout 51 (US & Canada): Free app to earn cash back on your grocery shopping…up to 30% in cash back. Download Checkout 51 and Get a $5 bonus.
3. Rakutens (US & Canada): Earn up to 40% in cash-back on your online purchases at over 2,000 stores. Join Rakuten ($5 to $10 bonus).
4. TopCashBack (US): Receive free cashback on your shopping at over 3,000 stores! Join TopCashBack Now.
5. Caddle (Canada): Get free cash-back on your everyday purchases, plus get paid to answer short surveys and watch videos. Join Caddle Now (+$1 signup bonus when you use the promo code ENOCH48192).