If you are in the market for some New Years Resolutions about financial prosperity you have come to the right place. These tips are in alphabetical and numeric order – but not order of importance, only you can figure out which ones work best for you.
1. Contribute to your tax-free savings account (TFSA) – the best way to invest, you can put anything in a TFSA that you could have put in an RRSP. No tax deduction when you contribute but no tax on the investment income, no tax when you take it out.
2. Create a personal budget – figure out how much money you have coming in and what you want to spend it on, and how to save for the important things in your life.
3. Figure out the gain on your cottage – you do know that a family only has one principal residence. If you have a cottage then you will pay tax on any gain when you sell the cottage or when you die. Do an estimate of the difference between what you paid for the cottage (plus any improvements you have receipts for)– and the current value. Start looking for those receipts for the new roof, driveway etc. any receipt you can find will lower the gain and therefore lower your tax.
4. File your personal income tax return on time – we all pay enough tax so don’t make it worse by paying a late filing penalty.
5. Go to the pharmacy and get a list of your 2016 prescriptions – your pharmacy can print you a nice list, that way you won’t miss any and as a bonus your tax preparer will praise you.
6. Hold on to all the receipts for charitable donations you make – you can deduct charitable donations so hold on to those receipts and keep them somewhere you can find them when it is time to file your personal return. Consider the donations you make electronically.
7. Inquire about buying critical illness insurance – this is coverage for a situation where you cannot work due to serious illness, such as cancer.
8. Keep a mileage log – if you want to take a deduction for using your car for work or employment, you need to track your trips
9. Look at your power of attorney – do you have someone who can speak for you when you are unable to speak for yourself? Is it still the right person?
10. Make a list of all your debt and the interest rate that you are paying – being aware of how much debt you have and the interest you are paying is a good step to smart management of your debt, that is, paying off the worst stuff first.
11. Pay off credit card balances each month – credit cards are useful and the points are great, but if you are carrying a balance then you are paying too much interest and there are cheaper ways to get financing.
12. Review your life insurance – do you have enough, too much? If your children are now independent, then perhaps you can lower your life insurance.
13. Send your tax payments and installments on time – no one charges more than Canada Revenue Agency, they compound the amount owing each day and the interest is not deductible. If they ask you for money – send it to them.
14. Start a file for your medical receipts – track your mileage to appointments, keep the appointment cards, the parking receipts, and the amounts you pay for premiums, dental, glasses, prescriptions etc. You do not know if you have enough to claim unless you have the receipts.
15. Talk to your executor – the person who is responsible for implementing your wishes should know what your wishes really are. If there is an afterlife you do not want to spend it wishing you had explained something better!
16. Track your spending – since you now have a budget, you can compare your actual spending with what you thought was going to happen and make the right moves.
17. Update your will – assuming you have one, you need to look at it every now and again to make sure it is accurate – see #15