Financial New Year’s resolutions

December 27, 2012

By Sheryl Smolkin

Are the papers on your desk a jumble of bank statements, utility bills and reminders that it’s time to make a dentist appointment?

Does the balance on your credit cards exceed your ability to pay off the balance every month?

Do you know how much discretionary income you have or do you simply write cheques hoping you have enough money in your account to cover them?

If managing your household expenses is an exercise in frustration, maybe this is the year to get your financial house in order.

Every year most of us make at least one or two New Year’s resolutions, but often they are not written down and we do not hold ourselves accountable. Maybe it’s because we make too many resolutions or our goals were not realistic to start with.

Here are some financial New Year’s resolutions that could help you better manage your money and begin saving for longer term goals, including retirement.

1. Get organized: Two accordion files – one for outstanding bills and one for paid bills can go a long way to taming the mess on your desk. Keep a record of when each bill must be paid or when the amount automatically comes out of your account.
2. Reduce debt: Commit to paying off your credit card balances every month. If this is not realistic, consolidate debt at the lowest possible interest rate and pay it off as quickly as possible. Most provinces have credit counselling services that offer free, confidential debt solution services.
3. Understand your expenses: January is a great time to get a handle on your expenses vs. your cash flow. You have all of your 2012 credit card bills and bank statements. Once you figure out where the money went last year, you can more easily determine how you can free up dollars to repay debt and begin a savings program.
4. Pay yourself first: If you set up automatic monthly withdrawals for Saskatchewan Pension Plan, RRSP or other pension contributions, the Canada Revenue Agency will allow you to pay less tax each month instead of waiting for a tax return at the end of the year. You will hardly notice the decrease in your disposable income.
5. Saving at work: Employers offering the Saskatchewan Pension Plan or another registered retirement savings plan typically match all or part of your contributions — often up to 5 or 6%. If you haven’t enrolled, you are leaving money on the table.
6. Benefit claims: Your workplace health and dental plans are terrific tax-free benefits. Resolve to immediately send in all bills for reimbursement so you don’t lose or forget about them. If your spouse also has a health plan, make sure to re-submit for the balance not paid by your plan. Even small amounts can add up.
7. File your tax return early: If you have overpaid, the earlier you file your return, the sooner you will get a cheque back from CRA. However, if you have investment returns you may not get all of your tax slips until the end of March. Sending in your tax return too early could mean that you have to re-file later and even pay interest on taxes not paid by April 30^th.
8. Spending your tax return: Plan to spend at least part of your tax return to pay down debt, contribute to a tax-free savings account  or enhance your retirement savings.

Don’t bite off more than you can chew. Pick a couple of these resolutions that relate to your situation and put them on your “to do” list. Then send an email to so*********@sa*********.com with other suggestions you have for financial New Year’s resolutions. If your idea is posted, your name will be entered in a quarterly draw for a gift card.

And remember to put a dollar in the retirement savings jar for every resolution you make to get your financial house in order in 2013.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

3-Jan	Getting in shape	What to look for in a gym membership
10-Jan	Post-Christmas	How to get the most out of your gift cards
17-Jan	Online shopping	Ways to save by shopping online

financial planning, Money saving tips, New Year’s resolutions, pay off debt, Sheryl Smolkin

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