Five easy ways to get your finances in shape

A new year means new goals and for many people, getting their finances in order is at the top of that list. Here are five easy ways to get your finances in shape this coming year.

1 - Save a bit more for retirement each paycheque.

Whether it’s through your pension program at work, an RRSP, TFSA or other retirement savings tool, why not raise your contributions by $20 per paycheque. This is a week’s worth of coffees or two purchased lunches. This extra money matters because it adds up to just over $500 per year.

2 - Try a simplified approach.

If you are struggling to manage your money, cut up all but one credit card, have only one chequing account and one savings account. The theme of this tip is simplification; fewer accounts means easy monitoring and less service fees. If you’re saving for multiple big-ticket items like an emergency fund, a wedding or car repair, use the Mint.com app to flag each of those goals, but using that one savings account.

3 - Accelerate your mortgage repayment.

Despite interest rates being low, if you want to pay off your mortgage more quickly why not pay $40 extra from each paycheque and put it towards your mortgage . You can shave years off your amortization and thousands of dollars in interest charges. Let’s say your mortgage was $500,000 over a 25-year amortization. Given today’s rates, an extra $40 per paycheque could shave a year and a half to two years off the mortgage and save over $10,000 in interest.

4 - Make sure to reward yourself for being financially diligent.

Set small rewards that can be dished out to yourself on a monthly basis – like some self-care or going out for lunch once a week. Set large rewards that can be dished out on an annual basis like taking a trip or buying a big-ticket item like a bike. The key with rewards is to incorporate them into your budget so that you don’t get overspending guilt.

5 - Get yourself a credit card that earns you rewards

RateHub.ca (Canada) and Bankrate.com (USA) are great sites to compare cards. Switch to a credit card that provides rewards that matter to you – groceries, trips, blenders, cash back, or contributions to your retirement plans. This is entirely personal preference. The key with rewards is to use them or you might lose them. Reward providers have the right to do whatever they want to the program.