Experts say simply copying and pasting your 2024 budget isn’t enough to help you achieve your goals and maximize your finances for the new year.
“Things are not staying the same. Prices are still going up,” said Jessica Morgan, founder of the financial education site Canadianbudget.ca.
“You want to start the new year with a new plan,” he said. That means auditing and budgeting.
“First of all, we have to look back at the year we just concluded,” he said. “Take a look at your expenses to gain valuable insights.”
Tracking spending patterns in your current budget can give you insight into the year ahead. But if you haven’t started tracking your daily spending yet, Morgan suggests double-checking your bank and credit card statements.
Next on the list is an audit of all subscription costs.
“The services you subscribe to are probably increasing their rates,” Morgan said. “It’s a good idea to take a look at what you’re already paying for and what you’re subscribing to.”
Janine Rogan, chartered professional accountant and CEO of Wealth Building Academy, agrees. “Somehow we end up subscribing to probably more things than we really need.”
Negotiating any bills, such as cell phone plans, banking fees or insurance costs, can also help reduce your expenses, Rogan said. But if it can’t be negotiated, he suggested “looking for ways to add value,” such as adding more data to an existing phone plan.
The review stage prepares you for the next step: setting new goals.
“What do you want to enjoy and achieve this year and how much money do you need to pay for it?” Rogan said.
For example, if the goal is to have a maxed-out tax-free savings account (which has a renewed contribution limit of $7,000 by 2025), dividing that amount over 12 months will make it possible.
“That’s $583 a month,” Rogan said.
That savings method can be applied to any other financial goal: a vacation, purchasing a new vehicle, or even starting to plan for the upcoming holiday season.
“Automating it and making it happen in small chunks from the beginning can be really valuable,” Rogan said.
There’s a more “unfun” part of preparing for a smoother financial year, he said: figuring out if you’ll owe money on income taxes.
To get a rough estimate, he suggested taking your last pay stub of the year, which should include a breakdown of your annual salary, and putting the amount into a tax calculator.
“It will give you a good estimate of whether you’ll have to pay or not,” Rogan said.
“I tell people to do this in early January so that when April 30 rolls around, you’re not scrambling to pay thousands of dollars (and) you’ve had four months to save,” he said.
Saving time for taxes is especially important for self-employed workers and others who don’t automatically have taxes taken out by their employer.
For budgeting, Rogan said it’s important to be holistic and look at money overall, either quarterly or annually, allowing more room for flexibility and ebbs and flows in cash flow, rather than setting a strict weekly schedule. budget.
“You might have extra income one month, you might have extra expenses the next month, and sometimes those things are unexpected,” he said.
“We can’t plan for them, but sometimes we can look at a spending plan for a year.”
That still requires a routine weekly, biweekly or monthly budget check, whatever works for you.
Experts say a budget or finance buddy can also help you stay on track with your goals.
Kelley Keehn said she often schedules financial check-ins with her spouse for larger goals.
“What I do with my husband every year is, ‘What are all the things we need to do financially?’ said Keehn, financial educator and founder of Money Wise Workplaces.
“Maybe we need to set goals. And just drink some wine and write it all down,” he said.
Once goals are set, Keehn sets reminders every few months to review them.
Even if there is no time on the scheduled day, Keehn said at least the task wouldn’t get lost in the noise or feel as overwhelming, and could be rescheduled for a future date.
While it’s never too late to start tracking money, Morgan said it’s becoming more important to do so as the cost of living continues to rise.
Most people feel motivated at the beginning of the year, he said. So, he suggested choosing a method that works for tracking money — an app, a spreadsheet, computer software, or just pen and paper — anything that “fits into your everyday life.”
He added: “It’s a preventative step to make things easier all year long with your finances. I’d say it’s a good time to start.”
This report by The Canadian Press was first published Dec. 31, 2024.
