Cash in on financial fitness for the new year

The push in the new year is to set New Year’s resolutions, and often the focus is on losing weight or earning more money. I would like to advocate becoming more financially fit.

We should shed debt that weighs down our energy and bank account. Clarity gives access to action, so having an "accounting" of your finances in the new year is a great way to get a jump on your financial fitness goals.

Here are a few simple things that you can do to start a healthy financial plan and cash in on savings in the new year:

Weigh in financially

Go through your bank statements and credit card statements and make a list of where you spent your money last year. Be specific and break it down into the following categories:

  • investing (future)
  • fun (short term wants)
  • saving (long term wants)
  • sharing (donations, giving)
  • learning (education)
  • living (necessities)

Also, prepare a list of your assets and what debt you have. The more specific you can be, then the more clarity you will have around the "roles or jobs" you have your money doing on a day-to-day basis.

The biggest thing to understand is whether your money is going towards wants and needs or working hard for you to create short-term and long-term financial health. Sometimes we are carrying more debt than we realize, so having a starting point with a target reduction goal is the first step to creating a functional financial action plan.

Boost your financial immunity by doing a credit check up

This is a great time to check your credit reports and see the health of your credit rating/score. This is something that should be done a couple of times a year and you can utilize TransUnion or Equifax for free. You get access to a free credit report once per year, so follow-up to find out if there might be obstacles in your credit rating that will negatively affect the interest rates that you are paying. Routine checking of your credit score ensures that discrepancies are handled sooner rather than later, so that you don't have trouble when trying to apply for new financing.

Utilize the expertise of a financial and tax coach/advisor

With all the market swings this past year and the economy in a state of flux, take the time to review and re-balance your investments. Book an appointment with your financial advisor (or get one if you don't have one) and also a tax professional, to ensure you are building your financial immunity for the upcoming year and mitigating your financial risks. Investing time with a financial professional and strategically planning for the new year can support you in making smart investment decisions. Reviewing your income and deductible expenses with a tax professional can help minimize any potential tax liabilities in the upcoming year, and assist you in being proactive in 2016 to cash in on tax savings.

Avoid financial disability and recovery stress

Dealing with uncertainty is a common stressor for most individuals, and doing a review of your insurance requirements and ensuring your estate documents, like your will, are updated can reduce financial disability in the event of a financial crisis. Also, with your risk managed and financially debilitating events covered, your recovery time and stress will be significantly reduced. Doing this review as you head into the new year is fundamental to managing your financial risk, and ensuring that your "money tree" or assets are protected.

How do you measure or log your success?

Ensuring you have a system to pay bills on time and keeping track of your finances are valuable tools to have in place this year. This orderly tracking and managing of your money can eliminate late payment charges, negative consequences to your credit report for late payments and ensure you are optimally using your cash for the biggest savings. Recording or logging all your expenses in an orderly manner (based upon need vs wants, and type of expense), and reviewing them each month, is a necessity to ensure you are on track with your financial fitness plan.

Take time this year to plan, prioritize and prepare by doing a financial fitness checkup as you head into the new year.

Keep the conversation going

How are you staying financially fit? Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of Chartered Professional Accountants of Canada (CPA Canada).

About the Author

Kim Deep, CPA, CMA

Kim is a financial and business coach in Edmonton who assists business owners and individuals in creating systems for smart money management and making their numbers work for their businesses. Her authentic and practical approach to systemizing money management helps her clients get clarity and take action in creating sustainable growth and profitability. As a co-facilitator of the life-changing “Mastery of Self Expression” workshop with producer, director and actor, Larry Gilman, Kim supports clients in tapping into their passion and getting “real” with their needs and wants, so they get what they say they want in life. Her ability to create awareness of people’s psychology around money, and the relationships they have with it, are fundamental aspects of helping clients develop positive financial habits and financial independence.