Year-End Checklist: 9 Things to Do for a Financially Successful 2020 Welcome to 2020 \u2013 a clean slate to turn over a new leaf with your finances. As yet another year draws to a close and a new decade begins, it\u2019s time to reflect on the past 12 months, how you\u2019ve fared with paying off debt, managing your budget, and what you\u2019d like to do with the year ahead. Unsurprisingly, paying off debt, building up savings, and understanding personal finance is at the forefront of Canadians\u2019 minds when it comes to New Year\u2019s resolutions. Next to losing weight, 28 percent of Canadians said that improving their financial health is of utmost importance to them on January 1, according to a 2018 Tangerine poll. So how did you fare in 2019? Getting your house in order at the start of 2020 is a great way to begin the decade right. Here\u2019s our checklist of what to do to set the stage for a prosperous year ahead. 1. Calculate Your Net Worth You\u2019re conducting a year-end postmortem on your finances and your first step is to calculate your net worth to tally up your gains and losses for 2019. Your net worth is a snapshot of your personal wealth at any given point in time \u2013 it shows whether you\u2019re going further into the red, or if you\u2019ve added to your wealth. It\u2019s best to do it at the same time year-over-year to get a proper look at your progress, so doing it at the close of the year is sensible. Start by taking stock of your assets from bank account savings to TFSAs and retirement funds, then address your debts, from credit cards, consolidation loans, and lines of credit. Subtract your debts from your assets and you\u2019ve figured out your net worth. If you noted last year\u2019s net worth, how does this year stack up to last year\u2019s? You need to identify if you\u2019ve increased your net worth compared to the year before and if you\u2019ve made any inroads on debt repayments, savings goals, and other financial priorities. If this is your first time calculating your net worth, save your snapshot for a comparison next year. In the meantime, take a look to see if your balances owing are less than last year, and if your savings account balances have gone up. Ask yourself where you want to head to by the end of 2020. This can be a great exercise to celebrate your hard work, or it could be a wake-up call to help you see where you\u2019re heading if you stay the course with your current spending habits. 5 Personal Finance Tips Most People Wish They\u2019d Known Sooner 2. Gather Intel for Your Year Ahead If you\u2019re going to build a budget that\u2019s realistic, addresses your year-round needs, and future-proofs your finances for what lies ahead, you\u2019ll need to figure out some numbers: \tWhat you\u2019ll be earning: an estimate of your income \tWho and how much you owe: a list of all your creditors, the debts, and their interest rates \tYour fixed expenses, from your mortgage to your car payments, to discretionary expenses, earmarking realistic amounts for groceries, entertainment, and other categories \tYour savings goals: if you plan on going on a family vacation this summer, or if you\u2019re aiming to buy a new laptop before the next school year, get these expenses into writing \tAnd an often-forgotten-about, but important, category: your one-time costs, which include seasonal expenses like Christmas and holiday spending, birthday presents, summertime weddings, to property taxes, car servicing, professional dues, or buying winter tires Think carefully about this last category. If you know what to expect for the upcoming year, you can better prepare for these expenses. It\u2019s these one-off expenses that quickly derail us and force us to rely on credit to make ends meet. Looking back at your credit card and bank statements can shed light on what to plan for this year. What are Fixed, Savings, and Variable Expenses? 3. Build a Budget (and Seek Professional Help If You Need It) Now that you have accurate numbers in tow, build a budget that works. It needs to include your fixed expenses, your discretionary expenses, and debt repayment. Making sure you allocate part of your income towards debt repayment is crucial \u2013 identify a feasible amount of money to dedicate to paying off your credit card or making a single lump sum payment on your consolidation loan. Don\u2019t go too lean on your budget, skimping on certain categories. It won\u2019t be sustainable. Like crash diets that start in the New Year, a bare-bones budget that doesn\u2019t leave room for entertainment or eating out is simply setting you up for failure. How to Live On a Budget Most importantly, make sure your budget balances out and your income covers all of your expenses. Remember, no budget is set in stone \u2013 if you find you\u2019re overspending in some categories and possibly under spending in others within a few months\u2019 time, revise your budget so it better reflects your day-to-day needs. If you\u2019re not sure what a budget really is, what it could look like for you, or you need help with constructing your budget, our Credit Counsellors can assist you with this process through free, confidential, and judgment-free appointments. 4. Conduct an Audit of All Accounts, Subscriptions & Memberships The start of the New Year is a great time to do a full-scale audit of all of your existing accounts, recurring expenses, subscriptions, and memberships. Consider: \tAll of your credit cards, how much you owe, and your existing interest rates, and if any cards charge annual fees \tYour expense accounts, from utility bills, Internet and cell phone plans, to car and house insurance rates, even antivirus program payments \tMemberships, such as to the gym, Amazon Prime, Netflix, or other monthly expenses Evaluate how you\u2019re handling each of these accounts, whether you\u2019re staying on top of them, and if you\u2019re getting value out of these expenses. You may realize you have a gym membership you rarely use but are spending $50 a month on that you ought to cancel. Saving Money on Household Bills Be proactive too: if you owe thousands on a credit card, but you\u2019ve dutifully made your monthly payments on time, call the credit card company and ask for a lower interest rate. If you\u2019ve been a loyal customer paying for a family bundle to cover your household\u2019s cell phone usage, call your provider to ask for any promotions or scale your package down to what you\u2019re actually using. Do your homework and check on current rates for car insurance, life insurance, and costs for your utilities. If you belong to a Facebook group for your neighbourhood, pose a question to find out what others are paying so that you can compare. Putting in the ask for a lower cost, or to match a competitor\u2019s price, could shave a significant chunk of money off your bills. Ultimately, that\u2019s more savings back into your pocket to pay off your debts. 5. Check Your Own Credit Reports At least once a year, you need to request your own credit reports to make sure everything is accurate and that you aren\u2019t putting yourself in harm\u2019s way when it comes to fraud. It isn\u2019t the most exciting of tasks, but it\u2019s a great habit to get into as you do your New Year\u2019s financial checkup. Aside from fraud, you could be alerted to a drop in your credit score or an account that\u2019s fallen into arrears. It\u2019s important to check on your credit reports for exactly these reasons \u2013 any issues with your credit history could affect your ability to buy a house, borrow money, change jobs, and even lease a car. If there are any inaccuracies, or your score isn\u2019t up to par, you can make sure you start addressing concerns. How to Get an Awesome Credit Score 6. Set Your Savings and Debt Repayment Goals Now that you have your ducks in a row, set your goals, making sure that they\u2019re SMART\u2013 specific, measurable, achievable, realistic, and timely. Don\u2019t say \u201cI want to get out of debt\u201d or \u201cI want to save money\u201d \u2013 your goals need to include specific amounts, have set deadlines, and include an action plan to success. For example, \u201cI want to pay off $1,000 from my credit card debt by repaying $84 each month.\u201d Shape your goals around: \tOne or two short-term goals, which can be met within the next year. Examples include saving $1,000 for an annual summer vacation or paying off $5,000 of debt by year-end. \tOne or two longer-term goals, which look further ahead within the next few years. That could mean chipping away at all of your debts or saving for a down payment. Putting your goals into writing is a pivotal step \u2013 it gives you direction and context for why you\u2019re putting hard work into budgeting and saving. 7. Future-Proof Your Finances The road to being debt-free isn\u2019t a straight line, especially with the curve balls life throws at us. From a leaky roof to family emergencies, you\u2019ll need to be prepared for anything and everything that may derail you from sticking to your budget and staying out of debt. Future-proof your finances by setting up an emergency fund this year. Setting aside even $20 a month would leave you with a $240 buffer for when your monthly spending gets tight. Factor in setting up and saving towards your slush fund \u2013 the future you is thanking you already! Why Savings is Your Superpower When Paying Off Debt 8. Track Your Progress and Celebrate Milestones Between creating a budget to setting goals, you\u2019ve put a lot of plans into action that need to be revisited. Establish checkpoints throughout the year to review and measure your progress, how you feel about your budget, and if you\u2019re on track to reach your goals. Schedule monthly, bi-monthly, or quarterly dates into your calendar to re-evaluate. You could learn your plan is working, and you\u2019re on pace to reach your targets, which is worth celebrating. On the other hand, you may realize you\u2019ve lost focus with budgeting and tracking your spending, you haven\u2019t siphoned off money towards your savings goals, or you\u2019ve resorted to spending money you don\u2019t have again. That\u2019s worth knowing too. Sprinkling checkpoints throughout the year helps you get a pulse on how you\u2019re doing so there aren\u2019t any surprises by year-end. It also gives you time to make adjustments and get back on track to achieve your goals. 9. Get Your Whole Family Involved While you may have the best intentions for the year ahead, you need buy-in from your partner, your kids, and anyone else you\u2019re tied to financially. This is especially the case if you\u2019re sharing bank accounts, expenses, or credit cards. Hold a family meeting to discuss financial plans for 2020 \u2013 if you\u2019re swapping from dinner dates out to cooking at home, you\u2019ll need to warn your loved one and make sure they\u2019re on the same page. Getting support from your family, for instance around gift giving, will help you all stay accountable and work as a team. How a Pay Cheque Plan Can Help You Achieve Your Goals Bonus Tip: Seek Professional Help If You Need It Approaching the year ahead with a positive attitude and carrying out the steps above isn\u2019t light work. If ever you feel inundated with budgeting, choosing a debt repayment plan, or staying out of debt, one of our Credit Counsellors would be happy to help you. Appointments are free, confidential, and you can talk to a Credit Counsellor in person or over the phone. You aren\u2019t obligated to take any further action by speaking with the Counsellor and your meeting is a judgment-free zone. There are no hidden fees, fine print, or strings attached. Our Counsellors have had lots of experience and will help you review your budget and options so that you can reach your goals. Contact us now - you\u2019ve got nothing to lose and everything to gain.