While many people are making their New Years Resolutions about health and wellness, consider committing to your financial wellbeing too! Here are a few things to think about when writing down your 2024 goals.
- Top up your TFSAs or consider making a regular contribution
The new maximum limit for 2024 is $7,000, however if you have not maximized your contributions in previous years then you will have more than the annual limit to contribute. If you don’t have the cash available for a larger deposit, you could consider making regular bi-weekly or monthly contributions throughout the calendar year to maximize your tax-free growth on investments. If you don’t already have a TFSA, it’s probably time you open one!
- Consider an increase to your regular savings plan
A great way to fast-track your savings is to be disciplined about increasing your savings rates each year. Many investors don’t give this strategy much thought, and just leave their regular $100 savings plan in place for years and years. By increasing your savings each and every year, you’d be surprised how these increases can add up over the long-term. It usually doesn’t hurt your bank account too much by increasing each year, given most people enjoy employment raises or other increases to their income year-over-year. Make this part of your annual to-do!
- Top up RRSPs
Look back at your income for 2023, and decide if an additional RRSP contribution would benefit your tax situation. You have until February 29, 2024 to make a contribution to your RRSP to reduce your 2023 taxable income, and start enjoying that tax-deferred growth.
- Contribute to the kids’ RESP
Each year you contribute to the account, the government kicks in 20% of your contributions (up to a maximum of $500 per child / per calendar year). So, if you contribute $2500, the government kicks in $500! If you have carry-forward room from previous years, you can contribute up to $5000 per child in a given year, for a government match of $1000 (check your individual history for limits).
To make it easier on cash flow, many families opt for regular monthly deposits, rather than one lump sum each year. Another idea is if you receive the Canada Child Benefit (CCB), you can opt to sock this away as your monthly deposits to the RESP.
- Make your estate plan a priority
One of the most dreaded financial planning tasks of many is to ensure you have an estate plan (and keep it up to date). From national studies, over 55% of Canadian adults do not have a written will, or the will they have is outdated. Having a properly written will, as well as other estate planning strategies in place is key to help protect your wealth.
- Enroll in automatic payment programs for bills
Most companies and banks will allow you to set up automatic bill payments, so you never have to remember to pay a bill again! You’ll avoid costly missed payments, late fees, and negative marks on your credit score.
- Ramp up your emergency fund
Aim to have at least 3-6 months’ worth of living expenses so that in the event of an emergency (a job loss, unexpected expense, or house repairs) you won’t have to sell your investments or worse, rely on credit cards!
- Review your insurance policies
Life insurance, critical illness, disability, and even your home & auto insurance; take a look at upcoming renewals, or the need to tweak what you have. Have you changed jobs and lost your disability protection? A general review of your insurance needs, and current protection (or lack thereof) is an important piece of your plan.
Take the New Year as an opportunity for a whole picture financial review which can help you measure your progress and identify areas where improvements are necessary.