How can I get my finances in order?

Posted on 18 January 2024

Written by Ashvin Sharma

Managing your finances effectively is a crucial step towards achieving financial stability and peace of mind. Whether you’re looking to save for a major purchase, build an emergency fund, or repay your debts, getting your finances in order is a key aspect of achieving your goals. In Canada, you can benefit from a number of different resources and strategies to organize and optimize your finances. If you are facing financial difficulty and are unsure of what to do next, Spergel’s Licensed Insolvency Trustees are experienced professionals that can review your circumstances and advise you on the best pathway to debt relief. In this guide, we share some practical steps and valuable tips to help you get your finances in order, having helped over 100,000 Canadians on their journeys to financial freedom. So, how can I get my finances in order?

How can I get my finances in order?

We all want to feel financially secure. There is nothing worse than feeling stressed or worried about your money, and it can lead to mental health problems. While achieving financial security can seem challenging, there are some steps you can take to gain empowerment over your money. Ready for a crash course in money management? We share our top money management tips to inspire you to take control of your finances.

Assess your finances

In order to begin getting your finances organized, it is important that you first carry out an audit on your situation to understand where you are currently, and where you need to be. Begin by carrying out a thorough assessment of your current financial circumstances. A good way to do this is to create a spreadsheet where you track in detail all of your assets (including savings, investments, and property), and your liabilities (including debts and loans). This will give you a clear starting point for your financial planning for the future.

Set clear goals

Now you understand your financial situation, it is really important to define your goals – both short-term and long-term. These could include clearing your debts, buying a property, saving for your children’s education, or even planning for retirement. Keeping your goals realistic, measurable, and achievable will help you to stay on track and focused in your financial decision making.

Create a budget

Any kind of budget creation begins with looking at your income and outgoings. Now that you have your financial goals in place too, you should know how much you need to commit to saving in order to help achieve these targets. From your financial assessment, you should also now understand which spending habits you may need to adjust in order to fulfil your goals more easily. Always ensure your budget is realistic to increase the likelihood of it being successful, and consider the 50/30/20 budget rule. This is where 50% of your net income is allocated to essentials (rent, groceries, utilities); 30% to things you want (clothes, vacations); and 20% to savings or debt repayments.

Build an emergency fund

It is always a good idea to establish an emergency fund if you do not already have one. This is a pot of money saved to cover any unexpected expenses, like house repairs or medical bills. Life can be unpredictable, and sometimes you might need to quickly access cash. Instead of relying on credit cards or running up debt via loans, it is much better to dip into an emergency fund that is intended for life’s mishaps. Although building a fund will take time, you should aim to save around three to six months’ worth of living costs in a separate savings account. For those who are self-employed, it can be a good idea to aim for a little more than this amount.

Repay your debts

Carrying debt can drain your finances, especially where high interest rates are involved. For this reason, debt freedom is crucial. At Spergel, we are not the ‘get rid of debt’ people for nothing. Our experienced Licensed Insolvency Trustees are the some of the only professionals in Canada that are legally qualified to file all forms of debt relief. Our non-judgemental, compassionate professionals have seen it all, and can help you to make a realistic plan to pay off your credit card debts and loans. It is a good idea to follow the debt avalanche method – to pay off your high-interest loans first. Other options include debt consolidation to condense and simplify your debts, as well as consumer proposals and bankruptcy which can either reduce your debts by up to 80%, or eliminate them altogether. Book a free consultation with Spergel if you are struggling to know where to start with your debts.

Save and invest wisely

Saving a portion of your income each month – say 10% – and exploring your investment options is a great way to get your finances in order. Try utilizing registered accounts like Tax Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) to maximize tax advantages and to grow your wealth over time. For retirement, you will likely want to grow a savings pot large enough to comfortably fund your lifestyle.

Review and adjust your plan

It is good practice to review your financial plan and make any necessary adjustments based on changes in your life, income, or economic challenges. Staying adaptable ensures that your financial strategy remains relevant and effective. At least once a year, review your short-term and long-term financial goals, as well as the progress you are making in terms of reaching them. Although your roadmap might change, your commitment to getting your finances in order should remain consistent.

Speak to a Licensed Insolvency Trustee at Spergel

If you are concerned about ‘how can I get my finances in order?’ or feel overwhelmed by your debts, book a free consultation with an expert Licensed Insolvency Trustee at Spergel. We will review your financial circumstances with understanding and compassion, and recommend actions to take to reduce or eliminate your debts. No matter how bad you might think your financial situation is, there is always a solution and we are here to help you on your journey.

How can I get my finances in order? FAQs

Here are some of the most commonly asked questions about

How do you get financially organized?

To get your finances organized, the key is to be aware of what your finances are currently doing for you. Keep track via a spreadsheet to record your income, expenses, assets, and debts. This will help you to understand your financial situation, and will mean you actually know where your money is going and when. This can then shape our financial activities like budgeting, saving, and investing, and so it is a critical step that should not be missed. Developing good financial habits and staying organized can contribute to long-term financial success and stability.

What is the 50 30 20 rule?

The 50/30/20 rule is a popular budgeting guideline that suggests allocating your net income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. According to this rule, half of your income should go towards essential needs such as housing, utilities, and groceries, 30% can be allocated towards discretionary spending on wants like dining out or entertainment, and the remaining 20% should be directed towards savings, investments, or paying down debts. The 50/30/20 rule is a simple framework that can help you to prioritize spending and saving. Adjustments can be made based on individual circumstances and goals, making it a versatile guideline for creating a budget that works for you.

How do you create a budget?

Creating a budget involves several key steps to gain a clear understanding of your financial situation and allocate resources wisely. Start by documenting your monthly income from all sources. Next, list all your fixed expenses, including rent or mortgage, utilities, and loan payments. Identify variable expenses like groceries, transport, and entertainment. You should then subtract your total expenses from your income to determine your disposable income. Allocate a portion of this discretionary income to savings and debt repayment. You should then regularly review and update your budget, adjusting as needed to align with your financial goals. Budgets are essentially a roadmap for managing your finances, helping you to achieve financial stability and work towards your long-term goals.

Still wondering ‘how can I get my finances in order?’ The process requires commitment, discipline, and a strategic approach. By assessing your current situation, setting clear goals, and implementing practical steps, you can pave the way towards financial freedom. Remember, financial success is a journey, and taking consistent steps today can lead to a more secure and prosperous tomorrow. If you do not know where to start, book a free consultation with one of the expert term at Spergel, the ‘get rid of debt’ people.

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Ashvin Sharma

Ashvin Sharma is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) overseeing all of Spergel's offices in the Greater Vancouver Area and British Columbia. He is also our resident expert on homeownership debt and health debt. In his spare time, Ashvin loves to play sports, spend time with family and friends, and serves as a volunteer coordinator for "Free-Them", a Canadian organization committed to raising awareness about human trafficking.

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