In the ever-evolving landscape of life, our goals undergo a constant metamorphosis. We achieve some, redirect others, and forge new aspirations. As we navigate this dynamic journey, it becomes imperative to periodically assess and realign our financial compass. The commencement of a new year is an opportune moment to conduct a Year-End Financial Checkup – a crucial exercise that goes beyond mere number crunching. Just as one evaluates past achievements and charts new courses for personal growth, a financial checkup allows us to reflect on our monetary milestones and recalibrate our financial objectives for the future. This annual ritual not only safeguards our financial well-being but also contributes to our overall sense of fulfillment.

If you are a client of Cashin Mortgages or currently exploring mortgage options, this financial checkup is especially pertinent. Evaluating your mortgage strategy within the broader context of your financial goals ensures that your housing investment aligns seamlessly with your overall financial plan. Whether you are a first-time homebuyer, refinancing, or considering additional properties, understanding how your mortgage fits into your comprehensive financial picture is a key aspect of this introspective review.

Join us as we delve into the importance of this introspective financial review and explore whether your finances are poised for success in 2024.

1. Assess Your Budget

If you haven’t created a budget yet, now is the perfect time to do so. A well-crafted budget forms the cornerstone of a strong financial foundation. For those who already have a budget in place, this step becomes more manageable. While it’s ideal to review your budget regularly, we understand that life can get hectic, and financial matters may be overlooked. This financial checkup serves as an opportune moment to revisit your current budget and make necessary revisions to align with the upcoming year’s changes and goals.

Determine Your Net Worth

Understanding your net worth is a fundamental aspect of personal finance. Without a way to track or measure your wealth, it’s challenging to gauge your financial progress. If you seek a benchmark for wealth, retirement, or financial fitness, start by assessing your net worth. Creating a net worth statement is a basic skill that you should practice regularly.

How to Calculate Your Net Worth

Take a piece of paper and draw a line down the middle from top to bottom. On the left side, list all the assets that positively contribute to your financial well-being (excluding depreciating assets). On the other side, detail all your debts or liabilities. At the bottom, calculate the total for each column. Next, subtract your total liabilities from your total assets. The result represents your net worth. Regularly performing this calculation provides valuable insights into your financial health and helps you make informed decisions for the future.  

2. Know how much you spend

You’ll never know you’re overspending if you never take steps to keep a record of your spending in some way.

Want to become wealthier? Develop a habit of tracking your spending monthly. Precision matters; most people underestimate spending, relying on ballpark figures for major expenses like mortgages, car payments, utilities, and food.

Evaluate and Tackle Your Debts

How effectively have you been reducing your debts? Now is the moment to pinpoint gaps in your debt repayment strategy and address them. If you find yourself needing assistance, our experienced, unbiased counsellors can guide you through debt repayment options.

Conduct a Comprehensive Audit of Financial Accounts

Kick off the New Year with a thorough audit of all your financial accounts, recurring expenses, subscriptions, and memberships. Scrutinize credit card balances, interest rates, and potential annual fees. Review utility bills, internet and cell phone plans, insurance rates, and memberships like gym subscriptions or streaming services. Ensure you’re getting value from each expense and consider making proactive changes to save on household bills.

3. Are you Saving Enough?

In the quest for financial success, the accumulation of wealth is a deliberate and methodical process. Contrary to popular belief, the majority of wealth is not inherited or obtained through a stroke of luck, but rather, it is built step by step. At the core of this journey lies the fundamental practice of saving money, a pivotal factor that distinguishes the financially secure from the struggling.

Assess Your Savings Strategy

While saving may not come naturally, learning and cultivating this habit is essential. Understand the principles of saving money, from starting at any age to making it automatic and staying disciplined.

Principles of Saving Money:

It’s Never Too Late to Start:

The journey to financial security can commence at any stage of life. The key is to take that first step towards saving, irrespective of age or circumstances.

The Sooner You Save, the Better:

Time is a powerful ally when it comes to saving. Starting early allows for the compounding effect to work in your favour, enhancing the growth of your savings over time.

Make It Automatic:

Automate your savings to ensure consistency. Set up automatic transfers to your savings account, making it a seamless and ingrained part of your financial routine.

Saving Something Is Better Than Saving Nothing:

The act of saving, regardless of the amount, is a victory in itself. Every small contribution adds up, building a foundation for financial security.

It’s All About Staying Disciplined:

Discipline is the bedrock of successful saving. Stick to your savings plan, even when faced with temptations to spend, and watch your wealth grow steadily.

Try to Increase Your Savings Each Year:

As your financial situation evolves, aim to increase your savings proportionally. This proactive approach ensures that your savings keep pace with your changing needs and aspirations.

Save Extra Lump Sums When You Come Into Money:

Windfalls, bonuses, or unexpected income provide an excellent opportunity to boost your savings. Capitalize on these moments to accelerate your wealth-building journey.

Emergency Funds and Credit Reports

Examine your emergency funds – could you cover an unexpected expense today? Even if reaching six months of savings seems challenging, aim for at least 90 days. Additionally, don’t neglect to check your credit reports annually. This routine task helps ensure accuracy, guards against fraud and can uncover issues that might impact major life decisions. Regular credit checks are vital for securing your financial well-being.

4. Develop an action plan

Transform your financial aspirations into tangible actions by creating a list of three actionable items. Write them boldly on a piece of paper and strategically place it where you’ll encounter it daily – whether it’s on your bathroom mirror, computer screen, or car dashboard. Seize control of your finances by implementing the insights gained from your financial checkup.

With accurate numbers at your disposal, construct a balanced budget that covers fixed expenses, discretionary spending, and debt repayment:

Allocate for Debt Repayment:

Dedicate a feasible amount towards paying off credit card debt or making lump sum payments on consolidation loans.

Avoid Overly Restrictive Budgets:

Ensure your budget includes reasonable allocations for entertainment and other discretionary categories to make it sustainable.

Revise as Needed:

Periodically review and revise your budget to align with evolving needs and spending patterns.

Seek Professional Guidance:

If you find budgeting challenging, our Credit Counsellors offer free, confidential, and judgment-free appointments to assist you in constructing a personalized budget.

Set Your Savings and Debt Repayment Goals

Having organized your financial information, set SMART goals for savings and debt repayment:

Be Specific and Measurable:

Clearly define your goals with specific amounts, set deadlines, and an actionable plan for success.

Short-Term and Long-Term Goals:

Create one or two short-term goals achievable within the next year and one or two longer-term goals looking ahead within the next few years.

Put Your Goals in Writing:

Putting your goals into writing provides direction and context, anchoring your commitment to budgeting and saving.

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