– by Deborah Reid, FMA, FCM –
When we postpone our annual checkup with the doctor, we often pay the price later. A delayed diagnosis can result in a health problem that can get worse and be more complex to correct. The same can apply to our personal finances, which is why an annual financial checkup is so important.
The start of a new year is a great time to take control of your finances and be proactive rather than reactive. The first step is to determine what is most important to you, and what goals you want to achieve in the short and long term. The next step is to determine what action needs to be taken in order to reach those goals.
The following can act as a checklist to help you assess your priorities:
✓ Assets and Liabilities – What do you owe and what do you own? Determine if your assets (house, property, investments, etc.) have increased or if your debts (liabilities) have increased.
✓ Assess Your Short-, Mid- and Long-Term Goals – Are they still your priority? What goals were achieved? If you are working with a formal financial plan, did you manage to follow it?
✓ Consider Tax-Saving Opportunities – Remember: “it’s not what you make but what you keep that’s important,” so take advantage of the following:
- RSP Contributions (regular and spousal) – You may need to consider income splitting during retirement.
- TFSA (Tax-Free Saving Account) – Take advantage of this savings program! Effective January 2016, an individual over the age of 19 can shelter a total of $46,500, with $5,500 annually.
✓ Risk Tolerance – When was the last time you reviewed your risk tolerance? If you find that you are uncomfortable with your investments, consider a review with your investment advisor.
✓ Protect Your Lifestyle – Review your insurance policies. Should something happen, will your spouse/children live the life that they are accustomed to? An Insurance Specialist can assess your life, disability, or critical illness insurance needs.
✓ Protect Your Loved Ones – If you don’t yet have a Power of Attorney or Will, you should speak to an estate planning professional.
✓ Educate Your Children – It is important to start young, so talk to your children about money and teach them how to save. Do they understand the difference between “wanting” versus “needing?”
Annual financial reviews are an important step in keeping you financially healthy. If you find yourself struggling to achieve your financial goals, contact a professional wealth manager for assistance.
This article is supplied by Deborah Reid, an Investment Advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund). This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. Deborah Reid can be reached at deborah.reid@rbc.com or 250-655-2884.
