Spring is upon us and with the rains washing away the winter dirt, many people start cleaning and organizing their households.  One thing that often gets overlooked in this period of purging and simplifying is your household finances. This year grab all your papers, open up your online accounts and tackle spring cleaning your finances.

#1: So many insurance policies, questionable benefit
It might seem odd for an insurance broker to say that you might not need all the insurance you are paying for but this can often be the case. As time goes by, people tend to accumulate policies and with payments automatically debited from your account, you often don't even know how much you are spending and on what.  For example, every time you take out a credit card or redo your mortgage, you likely get offered balance protection by your lender and often times you'll click YES and take the policy vowing to go back and look at the coverage later but life gets busy and you never do.  Here are the steps to getting your insurance policies organized:
  1. Get all the policies together.  You might not find all the paper work so check your bank account and see what payments for insurance are coming out each month.  Any mortgage insurance is likely bundled in with your mortgage payment so check your mortgage documents and see what portion is insurance.
  2. Group policies together.  Put all your life polices in one pile, all your disability and critical illness in another, and your home & car into another. 
  3. Go through your life insurance policies first: how much is the policy for, what type of policy is it, and how much are you paying for it? 
  4. Do the same for your disability and critical illness policies.  These might be grouped together with your life into one policy from your lender or insurance provider.  Separate out the coverage so you know what portion is for what coverage.
  5. Figure out how munch insurance coverage of each type you actually need.  There are basic online calculators available but your best option is to contact your financial advisor/insurance broker and sit down with them to figure out what your ideal amount of coverage is for you and your family.
  6. Once you know how much you need, you can get a quote for the best value policy for you from your advisor.  Keep in mind that you'll likely save by combining like policies into one larger one because each policy has a policy fee associated with it and the more insurance you buy, the better the price per $1000 of coverage works out to be.
  7. Apply for the new policies as required with the help of your broker.
#2: Do you bank everywhere?
While diversification is important when it comes to investing, it's not helpful when it comes to banking. You should only have one primary financial institution.  Your mortgage may be elsewhere but you shouldn't have a checking account here and another savings account there.  It makes things confusing and leads to a greater chance you'll bounce a payment. Also, most bank accounts charge a monthly fee, which is sometimes waived if you maintain a certain balance, so if you have more than one, you're likely paying more fees than necessary.  

Take a look at the banks out there and see which one has the accounts you desire.  Having a branch close to your home is convenient too. If you do want to have an outside savings account, like with ING Direct, that's okay but they linked bank account should be your one and only primary checking account.

There are often rewards available from the banks and credit unions for switching your accounts to them so take a look at what promotional offers are available as well when deciding on who your new primary banking institution will be.

#3: A wallet full of cards
Canadians use credit cards. Whether it's to stretch out the payments on a larger purchase or just to consolidate spending, Canadians are using borrowed money every day.  While having no debt is ideal, it's not very likely so you need to ensure you are using your cards in the best and most efficient way.

  1. Get all your cards out of your wallet and any you have hiding away for emergencies.  
  2. Make a list of details of each card.  Such as Mastercard ABC has a 25% interest rate and offers me 1% cash back on my spending and has a $100 annual fee.
  3. Tally up how much you owe on each card, if you are carrying a balance.
  4. If you are carrying balances on more than one card, find which one has the best interest rate and transfer all the balances to that card, if you have room.  If you're out of room on your lowest interest rate card, call them and ask if you could increase your balance as you want to transfer your other cards to that card.  Usually if you have a decent credit score, they will be happy to be getting all your business and will approve the increase.  However, if you have access to a line of credit, since they usually have much lower borrowing rates, that should be the first place you transfer your card balances to.
  5. Get rid of cards.  Having more than two credit cards is dangerous because it encourages unnecessary spending and is costly if those cards have annual fees associated with them.  You might love your department store card but if you're only using it once every couple months, you're likely better off getting rid of it and streamlining your credit situation and your wallet.  
Once you've organized your finances this spring, you'll likely find that you have a bit extra money around each month - a great start to that summer savings plan!