Spring forward with this 10-minute financial makeover plan

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No one likes to lose that one hour of sleep when our clocks spring forward, but perhaps you could put the time change to good use and do more than just remembering to check your smoke detectors.

As you sit with your cup of Joe on Sunday morning, even if you live in an area where time changes don’t occur, take a moment to consider this question: What would a one-year spring forward reveal about your finances?

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Would your credit-card balances be growing despite your efforts to spend less? Are you not making as much progress paying off household bills as you had hoped? Are you spending more on essentials? Are you stuck being underemployed? Or are your savings not adding up quickly or, more accurately, at all?

Getting ahead financially can be hard, and if you think your situation one year from now would be the same or worse than it is right now, you’re not alone. Many Canadians are worried and anxious about their finances.

But don’t let fear paralyze you into just wishing your financial situation could be better. Wipe the sleep from your eyes and rather than grumbling about the hour you lost last night, grab a pen and paper and spend the next 10 minutes outlining three things you can do to improve your situation in the next 12 months.

Shove your excuses aside, anyone can endure 10 minutes of an activity. And if the first 10 minutes goes well, spend 10 more minutes working on your three goals. But don’t get carried away because you can risk becoming overwhelmed. Focus on choosing three goals and making them SMART: specific, measurable, achievable, realistic and time-bound. This 10 to 30 minutes of reflection and SMART goal setting is meant to be a kickstart or second chance at the resolutions you have never quite followed through with.

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If you aren’t sure which goals to set, think about the reasons why you can’t seem to get ahead financially. You can probably name the most obvious ones: spending too much, not living according to your budget, only paying the minimum on your debts, sticking with one source of income and/or not saving regularly for emergencies. However, there are other significant ways in which your money is just disappearing. Here are three of them.

Fees, fees, fees

This is an often-overlooked reason why you end up with more month than money. Fees can add up to hundreds of dollars every month. The top fees in your bank accounts are the monthly charges, overdraft fees, being over the limit, having non-sufficient funds (NSFs) and using another bank’s ATM.

The fix: Consolidate all your banking in one financial institution and take advantage of loyalty discounts. Review the terms and conditions of your accounts with your banker and choose the accounts and products that best suit your needs.

Once you’ve dealt with your banking fees, look at all your other services, such as utilities, cellphone providers, online subscriptions, shopping apps, streaming services, etc., and attack any fees you have to pay for those in the same way you tackled your banking fees.

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Low credit score

Yup, a bad credit rating will cost you. You’ll pay more when you take out a loan because you’re deemed a higher risk for repayment. Mortgage renewals, same deal; you won’t qualify for the best rate they can offer you. Zero per cent financing on a new car, forget it.

If you miss minimum payments on your credit cards, they might not only charge you a fee, but most companies will also raise your interest rate (APR) by at least five per cent. And the kicker is that they’ll keep it that way until you make all your minimums on time and in full for at least 12 months. If this feels harsh, it definitely can be on your finances.

The fix: Get a budget that allows you to make all your payments as agreed. Earn more, spend less and start taking steps to rebuild your credit rating.

Paying too much in taxes

Spring is the perfect time of year to figure this one out. If you get a big refund each year, it can be worth paying less in taxes throughout the year and putting more of each paycheque into your account. While it’s great to get a refund and spend it on a splurge rather than paying off a bill or saving it, having a little extra in your budget every month can be worth it.

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The fix: Work with your tax professional to balance your tax withholdings and payroll deductions more effectively. You don’t want to end up with a bill from the Canada Revenue Agency next year, but you also don’t want to keep lending the government your money interest free. You ideally don’t want a tax refund if you can help it.

We are our money’s worst enemy, so rather than spending it impulsively or simply letting it disappear, take charge and put an end to the constant drain.

Sandra Fry is a Winnipeg-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt for more than 27 years.

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