Everybody knows that good financial management habits pay for themselves in the long run, but the day-to-day discipline required can be a grind. In a bid to inject a little more fun into the process for 2017, we’ve created a personal finance Bingo board to track your tasks. Every time you complete a line, yell out ‘Bingo!’ and treat yourself to something nice.
UNDER THE ‘B’
Create/update your financial plan
“It’s your map that tells you if you’re on track,” says Lee Helkie, a certified financial planner with Helkie Financial and Insurance Services. “Without that, you’re driving aimlessly.” If don’t have one, look at your cash flow (income versus expenses) and your short-term and long-term plans. To calculate your net worth, list your assets and subtract your debts; this figure should be improving from year-to-year.
Set some money goals
“Every day that you (delay) starting your own personal plan, the more expensive it gets because it means later on, you need to save more,” Helkie says. Figure out what you’re saving for and start right now, however small the contribution might be.
Take advantage of your RRSP contribution room
The government allows you to contribute up to 18 per cent of your previous year’s income to an RRSP, up to a maximum of $25,370 in 2016. You’re then taxed on your income, minus the RRSP contribution, which could result in a tax refund. Socking money away for retirement is rarely a bad idea, and the sooner you start, the better.
Track your spending
You’re (mostly) mindful of how you’ve spent your money and it’s in line with your money goals. Keep it up because monitoring your spending (tallying receipts, reviewing bank statements, logging purchases in an app, etc.), can prevent a financial hangover and help you identify bad habits.
Open or adjust your automatic savings account
You’re paying yourself first. High five. Schedule your pre-authorized contributions into your TFSA, RRSP, etc. on payday. You won’t even notice that the money has left. Go a step further and consider taking advantage of dollar-cost averaging by setting a fixed monthly or quarterly amount to invest which will focus your efforts on accumulation rather than trying to time the market.
UNDER THE ‘I’
Invest in your child’s future
Contributing to a registered education savings plan (RESP) is a no-brainer. Not only does the money grow in a tax-sheltered vehicle but the government tops up your annual contribution by 20 per cent (up to a maximum of $500). The funds can then be used for tuition, lodgings, books, travel, etc.
Be savvy with your tax refund
That means don’t spend it all on a vacation because it’s not a windfall — it’s your money. Instead, maybe put it toward your debt or mortgage or invest it back into your RRSP, which your employer matches.
Take advantage of employee benefits including health and dental
If you don’t use them, typically you lose them, says Susan Daley, associate portfolio manager with PWL Capital Inc., says. Planning out your dreaded dental visits — and maybe a massage or two as a reward — can help ensure you don’t let benefits you’ve earned lapse.
Bring your will and powers of attorney up to date
This is important because assets listed in your will might no longer be available or couples may have divorced or new beneficiaries may have been born (such as grandchildren). If a power-of-attorney moves away or is no longer available, she may be unusable. Updating the status once a year can prevent major issues in a time of crisis.
Go into debt repayment beast mode
Get into the habit of paying down your debts by tackling the one with the highest interest rate first. You could also negotiate with your lender to switch to a credit card with a lower interest rate or secure a loan to pay off your department store credit card debt. “You could probably get a consumer loan for 8 per cent which is a heck of a lot better than 20 per cent or 30 per cent,” says Janet Gray, a certified financial planner with Money Coaches Canada. Most importantly, stop using credit. “If (people) don’t change their ways, they’ll end up with twice as much debt because they’ll run up the credit cards again,” says David Trahair, author and personal finance trainer.
UNDER THE ‘N’
Pay off your credit card balances on time and in full
If you only make the minimum two per cent payment on your bill, it could take years to clear the balance and cost you untold dollars in interest. Keeping a clean sheet this year will prevent the balance from getting out of control, and could pay off for years to come
Enrol in your company’s matching contribution retirement
Yay, free money! Contact your human resources department to inquire about your employer’s pension or RRSP programs if you haven’t opted in and then take advantage of it. “You need to get your contributions in before year-end to get the company match,” says Daley.
Take advantage of something FREE
From going to the library to community programs to online exchange marketplaces, there are innumerable opportunities to get something for nothing if you do a little digging. Work some of them into your routine.
Get ready for tax season
You’ve requested receipts to be printed. You’ve got a call into your financial company to ask for a report on your investment losses and gains. You’ve registered to use the CRA’s My Account For Individuals to get access to T4 slips, past returns and more. You have an idea of how much you might owe or receive in a return. While its better to start early, there are a few weeks to go until the RRSP deadline and you can still work some magic to boost your return. “For me last year, I owed $2,000. I needed time to plan to come up with the $2,000,” says Intuit tax analyst Peky Tsang. “I played around with the RRSP calculator in TurboTax and I needed to put in $4,000 to get a $2,000 refund.”
You and your tax-free savings account are besties
TFSAs are awesome for investing and saving because your money can grow tax-free. Those who have never contributed since its 2009 inception and were at least 18 years old at the time, have $52,000 of TFSA room in 2017 — what better time to start using it?
UNDER THE ‘G’
Be mortgage-free sooner
Increase your mortgage payment frequency to bi-weekly or weekly, or top up your monthly payment. Consider dropping a lump sum payment if your lender allows it. Every little bit counts when it comes to the largest single debt most Canadians hold.
Buy life insurance
“Anytime someone is dependent on you for financial support, you should have life insurance,” says Gray, of Money Coaches Canada. If you die, “how are your kids going to live the type of lifestyle that you want them to live? Who’s going to pay for their education? Who’s going to help them with a down payment on their house?”
Give a planned gift to charity
“People need to have a plan around their charitable donations as they do with their overall financial plan,” Gray says. “As opposed to giving $5 here and $5 there, it has a bigger impact if you can go to your favourite charity and say, ‘Here’s $200…’ The tax credit rate increases dramatically after the first $200.” Also, you can take advantage of the First-Time Donor’s Super Credit if you haven’t claimed donations on your tax return in the past five years.
Set up contingency plans
Start an emergency fund. Or buy disability or critical illness insurance. Or travel insurance. “Risk management is about protecting what you build,” Helkie says. “Are you covered if you get sick or hurt? Are you covered if you go out of country with your kids?”
Take advantage of tax credits
Medical expenses, childcare, moving expenses, teacher school supplies are among the expenses you can take advantage of on your 2016 tax return. Note that you had to have have made the payment before the end of the year to claim it. “It’s about not giving away free money that you’re entitled to,” Daley says.
UNDER THE ‘O’
Check in with your financial planner/investment advisor
Update her on your new dreams and any changes in life, salary, etc. Talk about how your investments are doing. “Discussions around risk and positioning with the way the markets have reacted post-Trump election… (Maybe it’s) a great time to take some profit out of stocks and rotate into bonds; maybe we need to look at sectors which have underperformed such as the utilities or the REITS — these are the discussions you should be having (with your advisor),” says Martin Pelletier, a portfolio manager at Calgary-based TriVest Wealth Counsel Ltd.
Make some extra cash
Maybe you want to get that side hustle going, driving for Uber or freelancing. Maybe you just want to work up the nerve to negotiate for a pay raise. “If your financial plan determines that your savings aren’t sufficient to meet your goals than you have two options: you can reduce your goals or delay them, or boost your savings by increasing your income or reducing expenses,” Daley says.
Stay on top of your investment portfolio
Just don’t be obsessive about it: Research shows that the more you tamper with your portfolio, the less money you’ll walk away with. However, it’s important to check if you have the right asset allocation and rebalance your portfolio if needed. “Stocks are trading at their all-time highs in the U.S.… You should always look at rebalancing when your stocks have been doing well,”says Pelletier.
Use tax-loss selling smartly
If you sold some losers in December to apply against capital gains or carry forward to use when needed, then you’re all set for your 2016 return. If not, it’s never too early to start planning for those 2017 taxes. Keep in mind that you can sell a stinker to lock in the loss and buy it again, but you must wait 30 days or the Canada Revenue Agency considers it a “superficial loss” and you won’t be able to claim it.
Get government green
There are plenty of ways the government can put cash in your pocket. You can look into federal and local grants or get money to start up a business. Energy-efficient improvements to your home such as insulation and draft-proofing measures can also be covered. You could also receive a forgivable loan or grant to help a lower-income, senior family member with renovations to improve safety and accessibility. These grants are going to someone — why not you?
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