You may find that you have some extra time on your hands this spring, perfect for an extra deep spring cleaning. But what about dusting up your finances? Julie Seberras, Senior Manager of Wealth Planning Support at TD Wealth, joins Kim Parlee to count down five ways to make your finances sparkle and shine this year.
Julie, welcome. Let's get right to it, number five. Get into the corners of your budget and find that extra cash that might be hiding in there.
- Yeah, absolutely, Kim. You know, the pandemic has changed how so many of us are spending our money. We're coming up on to a year where so many of us have been working from home.
Maybe you're spending less on things such as commuting costs or traveling, but you might be spending more on things such as groceries or streaming services. So check back in with your budget, reassess. Make sure it reflects these new realities. And in the process, you might even be able to uncover some additional opportunities to save toward your goals.
- Number four, you say dust off your goals. This pandemic really has had a lot of us taking a look at our lives. And we're looking at them a bit differently.
- Absolutely. It's always important to check back in with your goals, but more so now than ever. So ensure that your goals are still relevant to you, and determine whether or not you've been tracking towards those goals.
If you are tracking, how do you keep the momentum going? But if you're not, how do you get yourself back on track? Goals should always be measurable and time-bound. So also take a look to make sure that the dollar amount as well as the time frame allocated to your goals is still relevant to you.
- Number three, you say make a spic and span liquidity plan. Basically know where you can turn if there's an emergency.
- Yeah. The general rule of thumb in financial planning pre-pandemic was typically around the neighborhood of three to six months of expenses. But given the current economic and employment situation, you may consider allocating a little bit more to this purpose. TFSA is a non-registered accounts are a great place to put the emergency funds, because you can withdraw the money without any tax implications. You'll also want to make sure that that money is invested fairly conservatively, so it's not subject to market volatility, as well as some investments that have little to no fees, should you need to liquidate.
- Number two, you say clear out the debt. It's like that junk drawer we all have, and we have to do something about.
- Oh, I definitely have one of those, Kim. And so when it comes to debt, really, what we want to do is manage it so that we're reducing the overall interest cost to you. So take inventory of the debt that you have, and understand the interest rate that's attached to each.
If you are carrying debt on a credit card, chances are you're paying a really high interest rate on that. Tackle the debt with the highest interest rate first. But keep in mind, you still need to make sure you're paying at least the minimum required payments on all debt to keep that credit history in good shape. You may also consider consolidating your debt. That'll simplify things and may also reduce the overall interest so that you are reducing the interest cost to you over the term of the debt.
- All right. And number one is rearrange your savings for salary changes. Some of us may have been blessed with a little uptick in what we're bringing in over the next little while. And we need to think about how that affects other things.
- For sure. When was the last time you gave your savings a raise? So check in with that. If you were lucky enough to get a pay raise this year or maybe last year, you might have the capacity to increase your savings a little bit. Every little bit counts, especially when we take a look at the growth compounded over the long term.
- Julie, thanks so much.
- Thanks, Kim.