Five personal financial systems to review for the year ahead.

The phrase “hindsight is 20/20” seems to have a very different meaning than in years past. To say living through 2020 was unprecedented seems insufficient. Our health and safety were at risk and, for many of us, our sense of financial safety and security was also threatened. However, as Albert Einstein once said, “In the midst of every crisis, lies great opportunity.” No matter what level of stress each of us experienced in 2020, we have an opportunity to review our financial systems now and, if needed, build them up even better than before.

1. Your Budget

When was the last time you reviewed your budget? Is your income the same or has it changed? Are your expenses still the same as the last time you reviewed them? Consider if there are any items in your budget that are not relevant anymore (e.g., parking if you’re working from home) and add in any new ones (e.g., streaming services). Does your budget balance? If it doesn’t, what decisions can you make today to get things in line, even if it’s only temporarily? Don’t forget that following your budget isn’t a punishment, it’s giving every dollar you earn a job to do.

2. Your Credit

Have you checked your credit reports through Equifax and Transunion within the last year? If you received any product deferrals (e.g., mortgage, car loan), you will want to review your credit reports to ensure accurate (and not damaging) information is reported. Furthermore, scams and fraud are evolving every month and it is crucial that you ensure your credit hasn’t been impacted, especially during this pandemic. It’s free to check your credit through both agencies.

3. Your Debt

Have you done a thorough review of your debt load since the pandemic started? Some Canadians were able to pay down some of their debt during lockdown because they had fewer work-related expenses like childcare and transportation. However, other Canadians have incurred more debt because they needed to supplement their lost income with credit. You’ll want to review your secured debt (mortgage, car loan, home equity line of credit) as well as your unsecured debt (credit cards, loans, lines of credit). List who you owe, how much you owe, interest rates you are paying, and how current your debts are (up to date, late, behind on payments, in collections). This information can help you create a plan.

4. Your Savings

Your savings account might be nice and plump but if you had to dip into it, or even drain it, COVID-19 was as good a reason as any. Now it’s time to think about rebuild- ing it and making it even bigger for the next emergency that comes along. If you’re overwhelmed, start small, because small savings become bigger over time. For example, did you know that if you put $40 into your savings account every two weeks you’ll have $1,040 at the end of one year?

5. Your Future

Regardless of COVID-19, the beginning of a new year is a good time to review your insurance, retirement savings and estate plan. Do you have appropriate insurance for the needs of you and your family without over-insuring anyone? Are you able to contribute to your retirement savings, through work or your own plan? If you’ve realized any savings by working from home, can you top up your TFSA? Is your will, power of attorney and health-care directive up to date? Do your family members know where all the important paperwork is kept? While this can be a difficult topic to address, preparation will save you time and money, and help your family avoid conflict and confusion in an emergency.

STACY YANCHUK OLEKSY IS DIRECTOR OF EDUCATION AND COMMUNITY AWARENESS AT THE CREDIT COUNSELLING SOCIETY.