At the beginning of every year, many of us go through an annual ritual of setting resolutions. Improving health is often high on many people’s lists — lose weight, exercise and eat healthier. In addition to improving your physical health, don’t forget about your financial health.

 

In today’s world of information overload, it can be refreshing to get information in an easy-to-read and simple format. Although some of the tips and strategies in this article may require you to spend additional time and commit additional resources to managing your affairs, it’s important to keep sight of the benefits.

 

By getting your financial life in order, you give yourself the opportunity to help maximize your returns and preserve your wealth. Consider going through this list, noting the items that are applicable to your circumstances, and speaking with a qualified tax/legal advisor about any strategies you want to implement.

 

Your financial to-do list

Review your financial situation and develop a retirement projection.

Once you’ve determined your current financial situation, think about your retirement. Will you have enough income and savings so you can retire comfortably? If you’re a business owner, how will you use the equity in your business to create retirement income, and will it be enough? As life expectancies generally get longer, maintaining a comfortable standard of living throughout your retirement may become more challenging.

 

Speak to your RBC advisor about preparing a retirement projection so you have a good indication of your overall situation and what changes, if any, need to be made to reach your retirement income goals.

Develop a financial plan.

A financial plan addresses all aspects of your financial affairs, including cash and debt management, tax and investment planning, risk management, and retirement planning. You can use information gathered from your financial review and retirement projection to develop a financial plan that will help you achieve your financial and retirement goals.

 

If you already have a financial plan, regularly review your plan to determine whether it’s necessary to make modifications to ensure you’re on track towards meeting your goals.

Ensure your asset allocation is up to date.

Is your asset allocation appropriate based on your risk tolerance, as well as your financial and retirement goals? Have your circumstances or goals changed? Review your asset allocation with your RBC advisor to see if any changes need to be made. In addition to reviewing your asset allocation, consider the tax efficiency of your investments and their place within your registered and non-registered accounts.

 

To help maximize your after-tax returns, check out the full article for some general investment guidelines you may want to incorporate into your overall investment strategy.

Consider putting family income splitting structures in place.

Implementing a family income-splitting strategy may help you lower your family’s overall tax bill, allowing you to keep more of your investment income.

If you have a spouse or children or grandchildren with little or no income, and financial conditions are favourable, you may want to consider setting up a prescribed rate loan for income splitting. The lower the CRA prescribed interest rate is at the time you set up the prescribed rate loan, the more efficient the strategy will likely be. Read the full article for more strategies.

Ensure you have adequate life and living benefits insurance coverage.

Are you confident that on your passing or if you became ill or incapacitated, you and your family would have adequate assets and income to maintain your standard of living? If the answer is “No” or “I don’t know,” consider speaking to a licensed insurance representative to determine if your current insurance coverage is adequate or if you require new or additional coverage. Give yourself and your family peace of mind by taking immediate action today to help secure your family’s financial future in the event of an unforeseen occurrence.

Use credit effectively.

Are you maximizing opportunities on both sides of your balance sheet? Interest rates fluctuate, so it may be prudent to review your debt obligations regularly and see if you can benefit from a low interest rate environment by refinancing your high-cost debt, including your student loans, your car loan or even your mortgage. For example, if you bought a home while interest rates were higher, you may be able obtain a new mortgage at a lower rate. You’ll need to consider whether refinancing is beneficial while factoring any applicable penalties.

Review your account structures to ensure they’re appropriate.

Prepare a list of all of your bank and investment accounts and determine how the account is owned and whether the ownership structure is appropriate. For example, many people own non-registered assets jointly with their spouse, for convenience or possible probate minimization.

 

Life insurance benefits are typically paid when the insured party passes away. The tax-free death benefit received can be used to pay off your debts and expenses or be used to create a legacy. At death, your assets often trigger significant tax obligations, which are frequently met by liquidating the assets of your estate. A life insurance benefit can help cover your tax obligations and leave your estate intact.

Make sure your Will, beneficiary designations and powers of attorney (POAs) are up to date.

Did you know that many Canadians don’t have a Will and that in some provinces, marriage revokes your Will? If you do have a Will, is it up to date? Does it reflect your wishes given your current situation? Does it include provisions that will allow your executor/liquidator to implement strategies which may help to minimize taxes and disharmony among family members upon your death?

Give back with charitable donations.

If you have charitable intentions, give some thought to the size and timing of your gift, as well as the type of gift you’re going to make. As an individual, you’re entitled to a donation tax credit if you donate to a qualified donee, such as a registered charity. The donation tax credit can reduce your taxes significantly.

Simplify your financial life.

Keeping your finances simple can help you in saving both time and money. The full article has some strategies you can consider.

 

Click here for the full article.