If just reading this has you feeling overwhelmed by the prospect of tackling your finances, know that you’re not alone. Financial anxiety is common: According to the 2022 TD Wealth Survey, money is a top stressor for more than 85% of Canadians. Surging inflation and the rising cost of living are keeping people up at night.
Decluttering your finances can help you feel more in control of your situation. Make today your starting point to gain greater awareness about your money behaviours and where they’ve taken you in terms of your financial health.
Building wealth takes patience and organization—and it starts with decluttering and simplifying your finances. Here are four steps to spring cleaning your finances and getting back on track.
1. Create an inventory
Start by creating a file of your financial information. This could include:
- A list of regularly scheduled payments and when they are due, such as:
- loan payments (lines of credit, credit card bills, auto loans, student loans, personal loans)
- insurance premiums
- utilities payments
- mobile phone bills
- property tax
- Legal documents such as wills, powers of attorney, contracts and property deeds
- Insurance policies and beneficiaries
- Tax records (for at least the past six years)
- A list of assets such as property, cars, boats, jewellery, sports gear, etc.
- A list of bank accounts, investment accounts (RRSP, TFSA, etc.), pensions and safety deposit boxes, plus details of how to access them
- A list of debts and liabilities
2. Develop a system to organize information
Your organization system can be old-school—printing off documents and filing them in separate folders, with categories such as:
- Home expenses (mortgage paperwork, lease agreement, home insurance, utility documents)
- Loans (lines of credit, credit card documents and statements)
- Auto documents (financial agreements, auto insurance, maintenance records)
- Saving and investments (monthly statements, etc.)
You can also organize your documents digitally using Google Drive or a Google Doc (or similar tools), linking out to the relevant documents.
3. Establish a budget
Now that you have both an inventory of what you owe and access to your spending info, you can get a clearer picture of your spending. Budgeting is about understanding how you are using your money so you can take a disciplined approach to managing your finances and achieving your financial goals.
Creating a budget doesn’t mean you have to stop spending money or start micromanaging your cash flow. It’s an awareness exercise. Review your budget and your spending each week and ask yourself: “Does this spending align with what’s important to me or my family?’” Once you know what you value, you can cut out what you don’t—and start remaking your financial future