If one of your New Year’s resolutions is to focus on your financial future then here are a few simple ideas to get you on your way.
Get organized. Organize your thoughts and goals on a piece of paper. Collect all of your financial and insurance statements as well as your will and POAs. Think about what you want to achieve.
List your goals. Setting realistic goals is critical. If you don’t have a map of where you want to go, how will you know when or if you will get there?
List your assets. Review all investment statements to get a clear picture of where you stand and determine if you will be able to meet your goals. Review the fees you pay and the performance. If you are not sure of the fees or performance, you should consult with a professional. Find a licensed Financial Advisor that can give you a free no obligation consultation and review your holdings.
List your debts. Not all debts are equal so make a list of liabilities and organize them by the annual interest rate. Those with the highest rates (most likely your credit cards debts) should be paid off first.
List your Insurance Policies. If you are sure the coverage meets your needs – great. If not, talk to a licensed Insurance Broker for advice. They can help you even if you thought you couldn’t qualify for coverage. Many new innovative solutions are available today that didn’t exist even a few years back.
List any deficiencies in your Will or POAs. If you find any deficiencies or changes are required you should contact a lawyer that practices family law and specializes in this area. Leaving this to just any lawyer is not recommended.
Ask Yourself:
Do I have a good handle on my cash flow? Do I know where all of my money is going?
Knowledge is power. Do you know how much a year you spend on your groceries, coffee, eating out, etc.? A simple Excel spreadsheet can allow you to track all of your expenses. At the end of the year, you might be surprised and identify a number of opportunities to improve your situation going forward.
Do I pay myself first?
If your priority is to just pay your bills and ignore yourself, this could be a big opportunity. Start putting money into your RRSP, TFSA or children’s/grandchildren’s RESP if applicable. This can easily be done by setting up automatic monthly contributions to your plans. Not only that, RRSP contributions reduce your income taxes and establish an income when you retire. RESP contributions trigger a 20% grant from the government.
Am I prepared for emergencies and unexpected expenses?
You wouldn’t want to live in a building without a solid foundation. Establishing an emergency fund with three to six month worth of essential living expenses in a savings account or money market fund takes all the worry away. The emergency fund can help you cover unexpected-but-necessary expenses without having to sell more volatile or heavily taxed investments.
Is my estate protected?
You worked really hard to get to where you are today. A little effort here can ensure that things are handled the way you want and in an efficient manner after you are gone. Estate planning may seem like something only for the wealthy. But, there are simple steps everyone should take.
Without proper beneficiary designations and other basic steps, the fate of your assets or minor children may be decided by government bureaucrats or the courts.
Review all your beneficiary designations in places like your company pension plan, insurance policies (including group plans at work), personal investment plans (like RRSP, TFSA, etc.), wills, POAs, etc. Be sure to protect the important documents. Make sure a trusted and competent family member or close friend knows the location of your important estate documents.
Am I ready for retirement?
Do I have an idea of how I wish to spend my retirement years? Do I have or will I have enough money saved to meet my needs? If not, hire a licensed Financial Advisor to help you with this important planning and investment advice.
Can I do all this on my own or do I need professional help?
These are just a few basic suggestions to get you started. You don’t have to do everything at once. Take one step at a time. If you feel overwhelmed, contact professionals that can guide you through this process.
This is your opportunity to get control of your life and turn 2024 into your best year ever.
