Welcome to our final Just the Facts for 2022. Before we get started, we want to wish you happy holidays and a very happy new year!
You may recall that last year we published a piece called “New Year, New You”. This was all about reviewing the year that was, setting goals for the upcoming year, and tips on how to start thinking about your finances. There were also some takeaways from the terrific book, The Psychology of Money. If you’re interested in a copy, please get in touch with someone on the team and we’d be happy to send one your way.
Time really does fly though and it’s that time of year again! If you’re taking some vacation over the holidays, this is an excellent time to revisit your finances and take advantage of the well documented power of fresh starts.
Here are some questions to get you started:
- What big, life changes took place this year?
- Marriage? Move (home or career)? Birth of a child?
- Be sure to start the process with a win from the year!
- What big, life changes are coming up next year?
- Did we have a budget/financial plan?
- Did we stick to it last year?
- If not, why did things go wrong?
- What can be done to ensure small slips don’t become permanent lapses?
- What do we want our finances to look like 1 year from now? How about 3-5 years from now?
- Keep it simple.
- Examples: Debts paid off (or paid down), A small emergency fund set up, part of each pay cheque getting invested, etc.
- What was discussed at the last meeting with our advisor?
- What follow ups were we responsible for?
- Did those follow ups get done? Could they be completed in January?
- Do we have wills? Are they up to date?
- What happens to your estate is going to be decided by someone.
- Without a will, it will be the Provincial government.
- Do we have life insurance? Is it enough?
- If you had a major life change in 2022 or have one upcoming in 2023, this one is very important.
- As your life evolves, so do your insurance needs to protect your family.
- What are we saving for?
- An Emergency fund? Post-Secondary education? First home? Retirement?
- Defining the purpose of your investing and then working out an appropriate timeline is critical to hitting your goals.
- Investing for a few months is done very differently than investing for a few decades!
- What is the status of our mortgage (and other debt)?
- How much do we currently pay?
- When does our mortgage renew?
- Does our current mortgage have a fixed or variable rate?
- Interest rates have increased significantly this year.
- How will this affect our payments? Is this increase reflected in our budget?
The holidays also mean you may have some extra cash on hand. Whether from gifts or a year-end bonus, you may have already mentally allocated that money somewhere. This was a great read on What Should You Do With Extra Money? if you're looking for ideas. It shares the typical advice of “pay down debt”, “pad your emergency fund” and “invest” but this advice works! It also highlights the pros and cons of different registered accounts such as Registered Retirement Savings Plans (RRSP), Tax Free Savings Accounts (TFSA) and Registered Education Savings Plans (RESP).
Finally, here is a quick infographic comparing RRSPs and TFSAs. For RRSPs, contributions made before March 1 can count towards 2022 income taxes. For TFSAs, the $6,500 contribution limit can be taken advantage of as early as January 3. If you’re unsure of which account makes the most sense for your situation, please get in touch with someone on the team. That’s what we’re here for!
Thanks for reading this past year! If there’s any topic you would like to see covered in 2023, please get in touch.