(NC) After the joy of the holidays has passed, you might be facing a bit of sticker shock when your bills start coming in. To avoid the pain of overspending, make this the year you finally get on top of your finances. Here are three things to keep in mind.
Build a budget
You’ve likely heard it before, but the only way you can truly understand your finances is to create a thorough budget that tracks all your income and all your spending. The Financial Consumer Agency of Canada has a free online budget planner.
Start by adding up recurring fixed budget items, like your mortgage or rent, car payments and transit costs, and subscriptions and memberships. Then, create a list of discretionary spending, like restaurant meals, gifts and nights out with friends. Next, tally up all your monthly income. If the expenses column is more than your total income, analyze your budget for areas where you can cut back.
Check your credit report
Your credit report is a very important document. It’s used by lenders to determine if you’re eligible for a credit card, loan or mortgage and, if so, what interest rate you’ll be charged. But sometimes the reports contain errors that can negatively affect your credit. You should regularly check yours and report any errors to the two credit reporting agencies in Canada: Equifax and TransUnion. Both are required to give you a free copy of your report.
Consider consolidating your loans
When you’re short of money, it can be hard to know which bills and loans to pay off first. Generally, you’re going to want to pay down the ones with the highest interest rates, such as credit cards. But if you’re really struggling to make your payments, talk to your financial institution about your options for consolidating your loans. This way, you’ll have only one monthly payment to make and it will usually be at a lower interest rate.
In some cases, you might need professional guidance on how to get out of debt. A certified financial advisor or credit counsellor can help get you onto the path of financial success.
Find more tips and financial advice at canada.ca/money.
