Organize your finances

Plan for long-term financial security by using your computer to research and arrange your investments and savings

Many of us work hard to be physically fit. We know it is important to maintain our physical well-being and to lay the foundation for a healthy future. Why then, when it comes to financial fitness, are so many people ill-prepared and unaware of the steps required to achieve long-term security?

Appraise your financial situation now

The first step to financial fitness is awareness. To evaluate your situation, try an online financial fitness quiz like the one developed by the Canadian Bankers Association. You can also request your personal credit rating.

Assess your goals

Being financially organized means different things to different people. It could be paying bills on time, arranging automatic withdrawals from your account or topping up your Registered Retirement Savings Plan (RRSP), which is a tax-deferred savings plan.

Suzy Reid, an investment advisor at BMO Nesbitt Burns in Toronto, helps new clients sort out their finances by starting with the basics. “Each client is different, but I definitely look at the debt side of things first,” she says.

Manage debt first and saving second

First, pay down the highest interest-rate debt (credit cards, then personal lines of credit, then mortgages), Reid suggests. Ask your bank about consolidation loans.

People who have a hard time dealing with debt should consider sitting down with a credit counsellor who can help develop a realistic budget to manage expenses, suggests Andrew Rickard, a certified financial planner in Toronto. Check out Credit Counselling Canada to find an office near you.

Develop your own system

While working with a qualified financial planner is arguably the best way to get your financial house in order, you can also help yourself in many ways. Susanne Langlois learned about financial organization first-hand as co-owner of a Toronto-based clothing boutique.

“My partner and I have always done our own books,” she says. “We use accounting software, meet with our accountant twice a year and try to set aside one day a week for accounting.”

They also use a spreadsheet program (Excel) to track incoming bills, receipts and other business data. “Excel is the easiest way for us to share information with each other and our employees,” adds Langlois. For instance, she has an inventory sheet with columns labelled Item, Sizes, Total, Cost and Product cost.

Find free financial resources online

The Internet also offers free resources to help you. Canadian Business Online boasts a wealth of personal finance information and resources, including an “ask the expert” panel, online discussion forums and tools such as the Net Worth Calculator (which is found under Tools, Banking & Credit).

Organize everything in one place

Some technological support beyond the Net exists to make your journey to financial soundness smoother. Software such as Money Plus 2008 helps you establish a budget, balance your chequebook, pay household bills and monitor cash flow.

Money Plus 2008 keeps an eye on the stock market for you. The program also can track tax-related income and spending — a handy feature when you’re preparing for tax time.

Opt for a less taxing time

Being prepared at tax time can help your bottom line. An orderly filing system can help you organize T-4 slips for employment income, expense receipts, charitable donations and medical expense receipts. Orderly filing can help you avoid last-minute, frantic searches.

And even though you know that April 30 is the deadline for filing personal income tax returns, did you also know that you should deal with some tax-related issues such as Registered Education Savings Plan contributions before the end of the calendar year to maximize your return? Staying organized can help you stay on top of these additional deadlines.

An invaluable resource for tax help is the web site of the Canada Customs and Revenue Agency (CCRA). Download tax forms, check your RRSP deduction limit, and find guides on virtually every tax topic that will help ease your tax burden in April.

Like achieving a healthy mind and body, achieving financial fitness requires commitment and discipline. Take responsibility for your financial plan. There’s no time like the present to get started.