Get smarter about money by reviewing and revamping your financial plan. Here are 5 financial resolutions to get you on track to smash your spending habits.
1. Get an Updated Picture of Your Balance Sheet
You can’t realistically expect to reach a goal without knowing where you’re starting from. What are your assets, and what are your liabilities? When it comes to your financial goals, you’ve got to have a scorecard. A clear understanding of what you own and what you owe will help you make informed decisions and keep you accountable. Everything else really proceeds from this, so take the time to bring all these numbers up to date.
If you need help – check out our free Net Worth Calculator.
2. Review Your Budget and Spending Habits
How close did you come to what you had planned to spend last year? Where did you go off-track and what can you do about that? There are often fundamental life changes that can impact your expenses, but it’s important to determine if those costs are one-time items or ongoing. Try to consider areas where you can trim expenses and get smarter about money. Although some budget items are fixed, a sharp pencil can often produce significant savings.
For help with your budget, check out our free Cash Flow Planner.
3. Optimize Savings with a TFSA and RRSP
The Tax-Free Savings Account (TFSA) is one of the best vehicles we have in Canada for saving money. No taxes are due on earnings generated, and the account is very flexible with the investments it can hold. For 2023, the contribution room remains at $6,500, but if you have been eligible to contribute to a TFSA since it was introduced in 2009, your total contribution room is now $88,000.
The Registered Retirement Savings Plan (RRSP) account is also a great option for saving. Contributions are tax-deductible and will save you on taxes today while allowing you to grow your retirement pot. The RRSP contribution limit for the 2023 taxation year is 18% of earned income you reported on your tax return in the previous year, up to a maximum of $30,780. For the 2024 taxation year, the RRSP contribution limit would be a maximum of $31,560.
To see the difference, check out our TFSA vs. RRSP Savings Comparison tool.
4. Update your Will, Power of Attorney and Beneficiary Documents
Financial planning is more than just budgets and retirement accounts. The new year is a perfect time to reflect on your family’s personal circumstances and ensure that these legal documents are up-to-date. It’s easy to set these legal documents aside and forget about them, but the reality is they need to be updated at least every five years.
To assess the status of your estate, check out our free Estate Planning Checklist.
5. Revisit Your Portfolio’s Asset Allocation
Are you comfortable with the level of risk in your portfolio? Risk tolerance isn’t static – it changes based on your net worth, age, income needs and financial goals. It may be that your current asset allocation and the resulting risk profile is just fine, but you want to make informed decisions here. The start of a new year is a great time to review your holdings and your overall asset allocation. Be sure to consult your financial advisor before making any rash decisions.
For help defining your investment objectives and personality, check out our free Investor Profile Questionnaire.
When you start the new year by charting your financial goals and how you aim to reach them, you immediately position yourself for success.
If you used any of the free tools mentioned in the article and would like to discuss any of your results, we are more than happy to have a candid conversation about your finances. Request Complimentary Consultation