End-of-year financial health check

Why do an end-of-year financial health check?

A lot can change in 12 months – births, deaths, marriages, divorces, job changes and homes for example.

That’s why it’s important to review your finances at least once a year to look at the progress you’ve made during the year that’s just ending and prepare for the year that’s ahead.

Here’s a list of things to consider:

Review your goals

Your goals are the heart of your financial plan. Are there goals that you’ve achieved that you can remove from your plan? Are there new goals that you need to add to your plan?

Review your debt

How well have you been able to manage your debt over the past year? What’s your percentage of good debt vs. bad debt? Do you have an emergency fund for unexpected expenses? If you do, did you have to dip into that fund during the year and need to replenish it? If your income has increased, you may be able to commit to paying down any debt further by increasing your regular payments or making a lump sum payment.

Review your savings

Have you kept to your savings plan during the year when it comes to retirement and other goals? For example,  you may now need to start or supplement education savings for a child or start saving to buy a home. It’s also a good idea to check if you’re making the most of any workplace retirement savings opportunities.

As the year wraps up, it’s also a good idea to look at whether you’ve made the most of tax-free savings limits as deadlines approach. You could look at how much you want to contribute to a registered retirement savings plan (RRSP) for this tax year or contribute to a registered education savings plan (RESP) in the coming the year.

Review your insurance needs

If there have been any big changes in your life this year, you’ll likely need to update your insurance coverage. This could include insuring a home, buying insurance for a child, or because you’ve started your own business. This could include life insurance, critical illness insurance or disability insurance.

If you’ve recently left a job or retired and lost workplace benefits, you may also wish to consider individual health and dental insurance.

Update aspects of your estate planning

If you’ve experienced any major life events during the year, such as a marriage or divorce, or a birth or death in the family, this is a good time to update your estate planning, including your will.

Make charitable contributions

If you intend to donate to a registered charity, it may be good to do so by Dec. 31. The federal tax credit will be 15% of the first $200 of donations and 29% of any additional donations. All provinces/territories have similar credits, ranging from 4% to 20%. The maximum donation credit you can claim is 75% of your net income for the year.

Use up workplace benefits

Most workplace benefits don’t allow you to carry forward unused amounts to the new year. Check with your benefits provider to determine what unused coverage amounts you may have for things like massage, physiotherapy, dental care or vision care and consider using them before the end of the year.

Update your budget and financial plan

Once you’ve reviewed your goals, debt and savings, you’re ready to update your household budget to account for any changes in income, new savings goals and debt payments. You can also work with your advisor to update your plan to help achieve your financial goals.