In 2022, your New Years resolution should be to streamline your personal finances


This column is an opinion of Mark Ting, a Foundation Wealth partner that helps clients achieve their financial goals. It can be heard every Thursday at 4:50 p.m. on CBC Radio as part of the On the Coast guide to personal finance. This column is part of the Opinion section of CBC. For more information on this section, please read our Faq.

At least once a year, I recommend doing a financial inventory by determining your assets, liabilities, income streams, and expenses. If something stands out, like your monthly expenses consistently exceeding your income, it needs to be fixed.

This is also true if it is the reverse situation where your income exceeds your expenses. The resolution of the former should include budget targets, while the latter should focus on investment and / or tax planning.

If I had debts, I would like to know how much and if the amount is up or down from previous years. I would also review my annual RRSP and TFSA contribution room and develop a plan on how to fund them, if applicable.

“Rationalizing” means being efficient and keeping it simple. Having multiple brokerages, banks, and / or credit card accounts can complicate your finances.

Many of us have multiple RRSPs and / or TFSAs in different institutions, all of which are invested differently with different risk profiles. If this sounds familiar to you, consider consolidating your accounts to reduce the likelihood of errors, such as over-contributing to a TFSA. Such errors often occur when a person has multiple accounts, which can make contributions difficult to track.

The penalty is significant for excess contributions to a TFSA, ie 1% per month, or up to 12% per year for excess contributions.

In addition to a summary of your financial accounts, your inventory should also include contact details for trusted advisors, passwords to access accounts, and an updated will.

Over the past year, I have spoken with several people who have experienced or are currently experiencing the death or deterioration of their spouse’s mental capacity. Couples who had planned in advance, streamlined their finances, and safely kept the family’s financial inventory easily assessable for both spouses were very grateful for being proactive.

Major life events such as marriage, divorce, illness, the death of a loved one, the birth of a child, job loss, and promotions often trigger new financial needs or actions. For example, due to a life event, you may need to update the beneficiary designation on a life insurance policy, RRSP, or TFSA.

Making a will should be the priority

Another often overlooked task is preparing or updating a Will and Power of Attorney (POA). Most adult Canadians don’t have a will, which I think should be a priority, especially if you have dependents.

Cost is often cited as a reason for not having a will and power of attorney. These documents, prepared by a two-person estate attorney, can cost several thousand dollars depending on the complexity of an estate, but in many cases, it’s a price worth paying.

Anyone with a large estate, who has remarried, has children from a previous marriage, or has a family business, should consider having their will prepared by an estate planning professional. Otherwise, you risk your heirs fighting over your estate which can cost a lot more, financially and emotionally, than the price you would have paid for a properly drafted will.

If your estate needs are straightforward, consider an online will provider where packages including a will, power of attorney, and representation contract cost around $ 100.

Most resolutions involve “investing more” or “paying off debt.” However, I believe that the first step that should be taken is a financial inventory. From there, you can identify gaps, prioritize your goals, and often with the help of a financial advisor, develop a plan to achieve them.


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