Clean slate

Opinion

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This article was published 13/04/2024 (523 days ago), so information in it may no longer be current.

If you get an urge to cleanse your abode at this time of year, consider sorting through your financial drawers, too.

If you’re not sure where to start, these tips can help tidy up your budget, bottom line and portfolio for a fresh approach to minding your money.

Clean up, literally

Most of us have ‘the spot’ for financial statements, bills of sale and other documents of significance. Over time, ‘the spot’ can become a bit of black hole. And it needs a thorough rug-beating to shake out the documents you don’t need anymore. “I break it down to what you toss; what you keep, and how to get it all organized,” says Kelley Keehn, personal finance educator and author of several books on financial fitness, including Rich Girl, Broke Girl: Save better, invest smarter and earn financial freedom.

The first thing is to pore over all your documents, and figure out what stays and what goes. Do keep your previous six years of tax returns, as required by Canada Revenue Agency rules. Also, securely store documents like your birth certificate, deed to your home, social insurance number, life insurance, will, power of attorney and health care directive. Anything you decide you don’t need, if it has any identifying information on it, shred it. And if you don’t have a shredder, it’s worth investing in one. You don’t want personal information falling into the wrong hands.

Declutter your accounts

Like a perilously slumping stack of document boxes, online accounts can become equally unwieldy. “People get really overwhelmed by the amount of accounts, credit cards and investments across multiple financial institutions with multiple advisors,” says Thuy Lam, a certified financial planner and money coach at Objective Financial Partners in Markham, Ont.

A big sore spot for graying workers — who have changed jobs a few times — are stranded group RRSPs and LIRAs (locked-in retirement accounts). While those might continue to be administered and managed with the employer’s asset manager at a lower fee cost, you have to ask whether it’s easier to transfer them, when possible, without tax implications to your own RRSP. “It’s about weighing the lower fees over the ease of management under one umbrella, and there are other low-fee options for investing… like ETFs (exchange-traded funds),” she says.

Subscriber’s regret

A review of your spending goes without saying for financial spring cleaning. And these days, it’s likely to raise awareness of the many monthly subscriptions you’re paying. “It’s just taking stock of those expenses and trying to minimize those where it’s possible,” says Natasha Macmillan, director of everyday banking at Ratehub.ca, about recurring and now rising monthly charges, in particular, from streaming services like Netflix. Now is the time to question whether the golden age of television is still worth being one of streamers’ golden geese, laying/paying those monthly fees. “Simply, micro-expenses add up to big costs,” she notes.

Dust-busting your budget

What’s that covered in dust — figuratively and maybe even, literally? Why, it’s your budget that you started in January and have since left stranded at the side of the highway to good intentions. Budgeting is a worthy exercise for anyone seeking to tidy up their money to get into a better financial position. Of course, some folks need a budget more than others, says Sandra Fry, a Winnipeg debt counsellor with The Credit Counselling Society. “If you’re running out of money every month, it’s time to get back to the basics.” To budget effectively, you need to be detailed, and where most households often fall short is tracking grocery bills. It’s one of the most under-estimated expenses Fry sees helping clients facing debt problems. Sure, food is an essential cost, but it’s more discretionary than you may realize. “Shop your cupboards first,” she says, examining whether you have built up items that could be put to use filling your family’s belly. Also, if you are throwing out fresh fruit, vegetables and other food weekly, consider alternatives like frozen veggies that take longer to go bad, Fry says. “You have to be intentional; if you’re buying it, use it.”

Plumbing your portfolio

No financial spring cleaning would be complete without a look under the rock containing your investments that, fingers crossed, will help you achieve your goals. This exercise at its core is really about determining whether the investments align with your financial plan, and “May is a great time to update your financial plan,” says certified financial planner Jason Evans with Evans Retirement Planning in Winnipeg. You can’t really evaluate your financial plan without examining your investments. Just like the drawer of important stuff in your kitchen, the investment portfolio can be a dumping ground for the next-great-idea gone awry. Consider selling investments turned sour but, overall, just ensure your blend of stocks, bonds and other investments is a strategy appropriate for your goals. To that end, rebalance. Rebalancing a diversified portfolio and “maintaining an appropriate risk level are crucial for successful investing,” says Evans, a fee-only planner. “To make rebalancing easier, consider looking into asset allocation ETFs, which rebalance automatically.” A host of all-in-one, low-cost ETFs do just that, which leave you with one less thing to tidy up next spring.

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com