New Year is Time to Reassess Your Finances

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It’s finally year. 2016. You’ve popped the champagne, counted down, watched the New Year arrival, and now it’s time to get down to the details of planning out the next twelve months. Perhaps it is time to join a gym, plan your travels down south, and of course set your personal and professional goals for the coming year. At the start of the New Year it is also a great time to review your finances and make sure everything is in the best shape.

To make the process as smooth as possible, here is a simple and clear financial checklist for January:

Check your credit report

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

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

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

Readjust your budget

The New Year is the perfect time to review your budget, modify and improve it for the next 12 months. Go through every aspect of your budget to make sure you are getting the best bang for your buck.

Review insurance policies

The questions you should be asking yourself about your insurance coverage every January include some of the following:Do you have enough life insurance or should you add critical illness? Are you taking full advantage of your employer’s insurance plan and benefits? Perhaps you will qualify for a better car insurance rate by shopping around or bundling policies. Should you increase or decrease your deductibles? Ask yourself these questions and make sure your insurance is working for you, and that you aren’t overpaying for policies you won’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 on it!

Set new short-term and review long-term goals

Once you’ve altered your budget and updated your insurance, it is now time to set new goals for the upcoming year. Your short-term goals should complement your long-term ones. For example, your current financial goal is to save $40,000 for a down payment on a house. You currently have $16,000 saved, and you want to save another $15,000 this year. After freeing up some money by modifying thebudget and decreasing the cost of your insurance, you know that saving $15,000 this year is a reasonable and within your reach.

To be able to reachsuccess with your goals, you need to set goals that are measurable and have a specific deadline. Check up on your short-term goals quarterly to make sure you stay on track throughout the year.

Make some retirement savings contributions

Although 2016 has already begun, you can still contribute to your RRSP for the 2015 tax year until Feb. 29^th. If you weren’t able to contribute as much as you had hoped in 2015, there is still time. Your RRSP contribution can be used to help reduce your taxes. An extra contribution can be helpful if you have specific tax owing (for example, from a side business or rental property), or if you are in a higher tax bracket.

Tax season is upon us

Tax season is fast approaching this New Year, and the last thing you want to do is launch yourself in a frenzy to try and find receipts and account summaries. Instead, start preparing now. Begin gathering your receipts for childcare, donations, public transit, prescriptions, children’s fitness programs and visits to the dentist. Do not forget that if you are a student or a recent grad and if you have federal student loans, you will need a statement from the National Student Loan Service Centre.