Your financial plan for 2022

Next, the review should be to understand how much income comes into the household each month, as well as what you need to live on. What are your bills and the cost of living?

This means that you will need to keep track of your spending so you know where your money is going. Keeping track will also help you understand if there are areas where you are spending unnecessarily. For example, you might not realize what restaurant meals are costing you each month, and this might be an area you want to narrow down.

Where your money goes is up to you, and what is “unnecessary” is different for each individual. The idea however is that you want to know that your money is going where you need it. Keeping track of spending can be an eye-opener if you haven’t done it before, as you might see it’s the little things that add up when you spend over a period of time.

With the cost of living covered, the next step is to consider how much you have left to spend on debt repayment and your financial goals. The more you are able to reduce unnecessary spending, the more you will have to pay off your debts.

You will want to review your monthly debt service charges to make sure that these monthly payments will allow you to reduce your debt and eventually pay it off. If it doesn’t and you’re only making minimum payments on your credit card or lines of credit, you’re not actually reducing primary debt. After you factor in these payments, all you have left is what you have available for your future financial goals.

As mentioned earlier, it’s important to review all of this regularly. Life events happen and other factors can affect your budget, and it’s essential that your financial plan be adjusted to reflect these changes. A periodic review will also allow you to see the results of your efforts in terms of paying off debt or setting aside for savings. It may take time but when you see progress, it’s very motivating to continue!

Michelle is a Licensed Insolvency Trustee and a Certified Insolvency and Restructuring Professional. She is Vice President of BDO and works in the Regina office. She has been in the industry since 2001 and believes in the system that enables individuals to find solutions to their financial challenges so that they can take charge of their finances.

If you are having difficulty or are overwhelmed by your financial situation, we can help you find the right solution. Call 1 855 BDO DEBTE to book a free, no-obligation consultation with a BDO debt professional.