Spring cleaning? Let’s tackle your financial clutter

As a physician, you must be fastidious and organized at work. But relaxing at home, you can let go—and disorder can take over, especially in the financial arena.

If you’ve got a messy pile of bills, financial statements and tax slips that are not sparking joy, maybe it’s time to declutter your financial life this spring.

Unless you’ve been living under a rock, you’ve heard of Marie Kondo and her “sparking joy” catchphrase. The Japanese guru’s books on the art of organization have spawned an entire Netflix series, Tidying Up With Marie Kondo, that extols the virtues of discarding all the extra stuff that’s weighing us down.

Decluttering of any sort can have positive effects on your health, leading to a decrease in anxiety and a boost in energy. Here are three things you can do in your financial life.

Toss those financial papers

Paper is one of the five categories that Marie Kondo addresses. “My basic principle for sorting papers is to throw them all away,” she writes in her bestseller The Life-Changing Magic of Tidying Up.

These days, you can simply avoid most, if not all, financial papers: phone bills, credit card bills, utility bills, account statements. Years ago, companies started encouraging customers to receive bills and statements electronically, with some companies even charging for paper delivery now. Electronic statements are generally kept online and are accessible for about seven years.

The Canada Revenue Agency (CRA) is encouraging taxpayers to go paperless. If you sign up for My Account, you can receive most CRA correspondence electronically, including notices of assessment, benefit notices and slips, and instalment reminders. If you’re incorporated, you can have personal and business access. My Account is secure, and it retains information for several years.

Here’s something to keep in mind for next year’s tax season—you can now worry a little less about tax slips. If you sign up for My Account, parts of your income tax return will be automatically filled in for you. The CRA’s Auto-fill service can supply the information from your T3, T4, T5, RC62 and PRPP slips, among others. So if you find you’re missing a tax slip for your accountant, the information should be with the CRA.

Consolidate your accounts

This decluttering suggestion takes more time but is well worth the effort in the long run. If you’re like many people, over the years you’ve opened various bank accounts and investment accounts, and obtained new credit cards—perhaps in response to promotional offers.

Now, you find yourself and your spouse with a few RRSP accounts, tax-free savings accounts, non-registered accounts, and various credit cards. This is hard to keep track of. It’s even harder to see your overall financial picture: how much you have and how much you owe, and for investments, whether you’re properly diversified.

One solution is to pick one financial institution and consolidate your accounts there. In many cases, they’ll help you pay any transfer fees to make this happen.

When your accounts are consolidated—especially your investment accounts—you and your financial consultant can look at all the investments together and determine the proper allocation and diversification for you.

Consolidate and pay down debt

Over the past 20 years in Canada, medical students have had to deal with ever-increasing tuition fees—and the resulting debt— to get through their education.

For those who do not have significant help from parents or relatives, the median  debt upon medical school graduation is $100,0001—with 42% reporting a debt of $120,000 or greater.

Of course, paying down debt is easier said than done. But for every credit card, loan and line of credit you have, it means getting a statement (paper or electronic), making payments and ensuring you pay on time each month. Late payments can hurt your credit score, which can make life difficult down the road. If you’re unable to pay down debt right now, think about consolidating your debt into a line of credit. This way, you have just one loan with one monthly payment, and fewer statements to manage.

Decluttering is an ongoing process. You can’t declutter once and expect it to “stick” if you don’t take a conscious role in maintaining organization. Beware of letting things slide and falling back into disorder.

Start small, make a commitment and look forward to a decluttered financial life. As Marie Kondo says, “People cannot change their habits without first changing their way of thinking.”

 

1 Association of Faculties of Medicine of Canada 

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