It’s that time of year again when the New Year makes many people reflect on what they want to accomplish, make better, or maybe just not repeat during the next twelve months. You may have already listed some of the more obvious ones such as finally fixing the railing on the back porch or getting more exercise but why not take a minute to set some goals to get your financial future in order?
FINANCIAL PLANNING NEW YEARS RESOLUTIONS
We will cover all of these topics in more detail in future articles but, in no particular order, here are some of the personal financial planning activities you should consider starting, reviewing or modifying in 2010:
Set up a tax-free savings account
Tax-free savings accounts (TFSA) were introduced in January 2009 and can be an effective way to save or invest because the growth in your investments is never taxed. There are a wide variety of investments that are eligible to be included in a tax-free savings account. What you choose to invest in depends on many factors such as your time frame and tolerance for variability. The good news is that if you missed making a contribution in 2009 the contribution room carries over to future years. 2010 would be a good year to start.
Set up an Education Savings Plan
Education costs are increasing at a higher rate than inflation and you need to start saving now for your children’s post-secondary education. A Registered Education Savings Plan (RESP) should be your first choice for this because the federal government will top up your contributions by 20% up to a set limit. It goes without saying that starting now is a lot better than starting later.
Review your mortgage
Interest rates are currently very low and it may make sense to replace your current mortgage with a new one. If you keep you monthly payments level you may be able to cut years off the time it takes to own your home. Your financial planner should have access to a mortgage specialist who can do the math and see if it makes sense to replace your current mortgage.
Create or review your retirement plan
If you intend on retiring with choices about your quality of lifestyle you need to start planning and saving now. The good news is that you’ll have plenty of time when you are retired to come up with excuses about why you couldn’t spare a couple of hours 20 years ago to meet with your financial advisor to get a retirement plan started.
If you already have a written retirement plan then you should review it this year to see if any changes are needed.
Create a plan for a rainy day
Financial planning is not just about saving and investing. It’s just as important to protect yourself, your family, and your income against the uncontrollable events that life can throw your way. There is no point in growing and protecting your savings if you don’t also protect yourself from the expenses of health care or from the loss of your income due to death or disability. A complete financial plan needs to look at the whole picture.
All of these suggestions have a common purpose which is to put you in control of your financial future. In order to implement them you will have to take some action and probably make some adjustments to your budget in the near term to give you and your family choices in the future. Why not get to it before another year passes?
Who we are:
Barry Altman, PEng, CFP
Barry lives in Meaford, having moved here from Elora almost five years ago. He has over 25 years of experience in private business in a number of fields including finance, sales, design and project management of numerous projects in North America, Europe and South America. Barry is a Professional Engineer and a Certified Financial Planner.
Owen Craig, B.Comm, M.A. Econ.
Owen joined Sun Life in 2008 after spending a dozen years in energy trading. Before leaving Calgary, he was responsible for managing a commodity portfolio worth over $200 million per year on behalf of Alberta consumers. But having grown up in small-town Ontario, he began exploring opportunities to come back this way. When Sun Life approached him about utilizing his skills to develop lifelong financial solutions that work for people, he jumped at the chance to relocate his family to the Georgian triangle.
Note that the information provided in these articles will, by necessity, be general in nature and you should always consult a qualified professional for advice on your specific situation. The opinions expressed are solely those of the authors and do not necessarily reflect those of the companies we represent. The authors retain all rights to publication.
