Your New Year Financial Checklist

Jordann Brown
by Jordann Brown January 7, 2016 / No Comments

You’ve uncorked the champagne, counted down, watched the new year arrive, and now it’s time to get down to the nitty-gritty of preparing for the next 12 months. It’s time to join a gym, plan your travel adventures, and set your personal and professional goals for the year. The new year is also a good time to review your finances and make sure everything is in tip-top shape.

To make the process as painless as possible, we’ve put together an easy-to-follow financial checklist for January:

Check your credit report

Your credit report (also called your credit history) is a summary of the credit you’re currently using or have used in the past. It includes information like:

  • Name and address
  • Employer
  • Job title
  • Length of employment
  • Open credit such as mortgages or lines or credit
  • Closed credit accounts

You should check your credit report at least once a year to make sure the information is accurate. You can request a free copy of your credit report from the two major credit reporting agencies in Canada: Equifax and TransUnion. For a small fee, you can also see your credit rating. If you find a mistake on your credit report, make sure report it to both companies immediately.

Refine your budget

The new year is the perfect time to review your budget and make tweaks for the next 12 months. Go through every line of your budget to make sure you are getting the most out of your money. No line item should be safe from scrutiny.

For example, most Canadians would consider rent to be a fixed expense, but in 2016, I’m planning to reduce my rent. I’ll do this by moving to a less expensive rental in an up-and-coming neighbourhood. This budget tweak should net me an extra $200 per month, which I’m planning to use to boost my home down payment fund to the tune of $2,400.

Review insurance policies

Do you have enough life insurance? Should you add critical illness? Are you taking full advantage of your employer’s insurance plan? Will you qualify for a better car insurance rate by shopping around or bundling policies? Should you increase or decrease your deductibles? These are the questions you should be asking yourself about your insurance coverage every January. Make sure your insurance is working for you, and that you aren’t overpaying for policies you don’t need.

Review your will

If you have a will, you should review your beneficiaries to make sure your investments and assets are going to the right person. If you don’t have a will, get one!

Set short-term goals and review long-term goals

Once you’ve tweaked your budget and adjusted your insurance, it’s time to set goals for the year. Your short-term goals should complement your long-term goals. For example, my current financial goal is to save $40,000 for down payment on a house. I have $16,000 saved right now, and I want to save another $15,000 this year. I freed up some cash by tweaking my budget and decreasing the cost of my insurance, and I know that saving $15,000 this year is a possibility.

To achieve success with your goal setting, you should set goals that are clearly measurable and have a defined deadline. Do quarterly checks on your short-term goals to make sure you stay on track throughout the year.

Rebalance your portfolio

If you’re managing your portfolio yourself, you should make sure that your asset allocation is in line with your long-term goals and rebalance accordingly. The process usually only takes a few minutes. If you use a financial advisor, make an appointment in the new year to review your portfolio’s performance and outline any changes you’d like to make.

Make retirement savings contributions

Even though 2016 has begun, you can still contribute to your RRSP for the 2015 tax year until Feb. 29. So if you didn’t get a chance to contribute as much as you’d hoped in 2015, there’s still time. Your RRSP contribution can be used to help reduce your taxes. An extra contribution can be helpful you have tax owing (for example, from a side business or rental property), or you’re in a higher tax bracket.

Prepare for tax season

Tax season is right around the corner, and the last thing you want to do is scramble for receipts and account summaries. Instead, start now. Begin gathering your receipts for childcare, charitable donations, public transit, prescriptions, children’s fitness programs and visits to the dentist. If you have a non-registered investment account, you’ll also need brokerage statements. And if you have federal student loans, you’ll need a statement from the National Student Loan Service Centre.

Flickr: Mufidah Kassalias