How to make a financial fresh start

Declutter and renew your personal finances in September

September is typically a time for fresh starts. Vacations are over and schools are opening again. This year, especially, has more of a “fresh start” feel to it with Covid restrictions lifting and a return to normalcy on the horizon. And it’s a great time to take stock of your current personal financial situation.

Here are four suggestions to help you make a personal financial fresh start in September, especially for those who have lacked confidence and felt stressed during the uncertainties generated by the pandemic.

1. Declutter and organize your digital financial space

Chances are your phone, tablet, and computer are cluttered with apps and websites that impact your personal finances. The trouble is, most of us let these get out of hand, and we keep loading new ones as they strike our fancy. The same goes for paper statements, invoices, and documents that still seem to pile up. That’s a sure sign of personal financial clutter.

To get back on the right path, and reduce your financial anxiety, separate your important digital services into a special financial priority folder or group that you can find easily. Keep it simple and high priority. These might include banking apps, credit card apps, investment or brokerage apps. Next, eliminate apps you no longer use (for example, old loyalty programs) and unsubscribe from retail and other promotional sites. Clean up your email in-box, and ruthlessly delete old messages.

It’s not a paperless world. So go through your home office, too, and shred old, unnecessary paperwork. Set aside one area in your home for your household financial paperwork. Check and cull it regularly.

2. Assess your overall financial situation

Saving. Do you have anything at all left over at the end of the month? If you do, that’s your “saving.” A rule of thumb is that you should strive to save 10% of your monthly income (or whatever you can, provided you do it consistently).

Debt. Recent statistics from Statistics Canada show that in the second quarter of the year, Canadians owed about $1.72 in household credit market debt for every dollar of disposable income. That’s a serious debt hole to be in. So look at your debt load in total: credit cards, consumer loans, lines of credit, etc. If you owe way more than you make, then it’s time to take some action. This should include everything from debt consolidation to cash flow management strategies.

Spending. If you have no idea what you spend each month, and simply rely on your debit card or app to be rejected when you run out of money, you have a problem. The solution is a simple one: make a budget. Then find places to cut back, economize, or re-set spending, so that at a minimum you’ll target your monthly income to exceed your monthly spending.

Investing. How is your portfolio performing? To get a fresh start here, put the trading window on pause and have a look at your statements. Check your asset allocation and trading patterns. Are you spending too much on trading commissions as you try to “beat the market”? Are you ahead of the game or behind the eight-ball? If you don’t know, don’t have any benchmarks, and can’t assess your asset allocation, it’s time to step back and make a plan.

3. Re-visit your financial plan

Here’s how to make a fresh start on fniancial planning: Gather all your necessary personal financial information to get a clear picture of your current financial situation. List your goals, needs and priorities, identify and evaluate strategies. Develop a workable budget and cash management strategy to control spending and manage personal debt (see above). Integrate this with a savings strategy connected to your investment accounts, RRSPs, TFSAs, employer pension plans, RESPs, non-registered plans, to meet your financial goals and match your risk-tolerance level.

If all this seems daunting or you just don’t have the time, consult a financial planner through a referral from a friend, relative, or colleague. Or consult the search tool on the FP Canada website

4. Make an action plan

Finally, if your fresh start is from ground zero, take a deep breath and take small first steps. Getting highly aggressive about your goals and trying to achieve everything at once is tempting. But it’s a recipe for frustration and anxiety, because it can be overwhelming. Be patient with your financial goals. Start with the easy ones, like the decluttering I talked about earlier. Break down your goals into smaller chunks and set daily reminders about what has to get done to meet your deadline. Once you’ve crossed a goal off the list, start on the the next one. (You’ll find it gets easier as you gain confidence and success.)

Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at rthompson@castlemarkwealth.com for a confidential planning consultation.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.