By Michelle Statz

BDO Debt Solutions

Your Financial Plan for 2022

Jan 7, 2022 | 9:31 AM

It is a brand new year and with the arrival of 2022, it is a great time to take stock of your finances and your financial health. Many will make New Year’s resolutions and for the last few years, paying off debt and saving are at the top of that list.

What I would suggest is to change your mindset about making it a resolution. We know that the vast majority of resolutions fail and so you may want to treat this as more of a financial plan and not just a New Year’s resolution.

A financial plan incorporates your income and expenses, as well as your debt servicing costs, and your financial goals or savings. It should be an ongoing work in progress and not just something to address in the new year.

Firstly, it is important to set a schedule to periodically review your financial plan. This could be on a bi-weekly basis, a monthly basis, or even every couple of months. If your income and expenses are something that change frequently, you should be reviewing your plan just as frequently. If you have a partner in your household, it may be something you can treat as a date night once a month, where you sit down together and review your financial plan. Good communication with others in your household is important so that everyone is on the same page.

Next, the review should consist of understanding what income is coming into the household each month, as well as what you need to live. What are your bills and cost of living?

History made

Predators repeat as PGLL Champions, cap off undefeated season

Jul 28, 2024

Police pursuit

Woman with warrant in P.A. arrested after high-speed chase in Saskatoon, caught by police plane

Jul 27, 2024

Canada punished

FIFA strips Canada of six points in Olympic soccer, bans coaches for one year

Jul 27, 2024

This means you will need to be keeping track of spending so that you know where your money is going. Keeping track will also allow you to understand if there are areas where you are spending unnecessarily. For example, you may not realize what eating out is costing you monthly, and that may be an area you feel you want to trim.

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

After the costs of living are covered, the next step is to look at what is remaining that you can put towards debt repayment, and your financial goals. The more you are able to trim unnecessary spending the more you will have for paying down debt.

You will want to look at your monthly debt servicing costs to ensure that making those monthly payments each month has you working towards lowering your debt and eventually paying it off. If that is not the case and you are only making minimum payments on your credit card or lines of credit, you are not actually bringing down the principal debt. After incorporating those payments, whatever is left is what you have available for your future financial goals.

As mentioned previously, it is important to review all of this regularly. Life events happen and other factors may affect your budget, and it is crucial that your financial plan be adjusted to reflect those changes. Also reviewing periodically will allow you to see the results of your efforts in terms of paying down debt or putting money aside for savings. It can take time but when you can see progress, it is very motivational to keep it going!

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

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