New Year’s Financial Resolutions
Happy New Year! Let’s start with recommendations for a young couple with a family. Most resolutions are generally broken. Let’s hope the resolutions below are not broken.
Jack and Diane have had financial savings issues in the past, and starting with 2025, they want to turn this around and improve their financial situation. They feel that making financial New Year resolutions and implementing them is a good start. To help identify their priorities, they made the following list:
Set Objectives – Goal setting is the foundation of achieving financial success. If they write down their goals, it will help Jack and Diane clarify them and establish their personal and financial priorities. With written goals it is harder to not to follow up, over time, with those goals.
Pay Themselves First – There is no better way of building wealth than paying themselves first. It simply means Jack and Diane take their savings off the top of their pay cheques rather than from what little, if any, is left over. By building their investments through regular monthly deposits, they also benefit from dollar cost averaging, by making regular investment purchases on a monthly basis.
Avoid Personal Debt – Since interest on personal debt, such as credit cards, car loans and a mortgage, is usually not deductible for income-tax purposes, paying it off is one of the best investments Jack and Diane can make. Too much personal debt is the most serious obstacle to achieving financial success.
Diversify Their Investments – Few people have the time or specialized knowledge to successfully manage their own investments. By choosing well- managed investment funds, (i.e. mutual funds), especially Global Mutual funds, Jack and Diane will have the benefit of professional management as well as better diversification. Mutual fund managers have access to current financial information much quicker that individual investors and therefore can make better financial decisions sooner.
Maximize their TFSA, Non-Registered and RRSP investments. These accounts are Jack and Diane’s cornerstone of their retirement financial plan. But they haven’t been making enough deposits to meet their goals. They can boost their plans, by setting up monthly automatic deposit arrangements and by depositing any refunds they receive into their investments.
Prepare an up-to-date Will – They want to decide how their estate will be settled. A professionally prepared Will makes sure that their estate gets settled quickly when they die and reduces the risk of the courts making distribution decisions for them. Jack and Diane also want to choose who gets custody of their children.
Reduce Their Taxes – There are not as many generous tax breaks as in the past. In addition to RRSP deposits, they may be able to further reduce their tax bill by shifting investments into the hands of lower-income family members. Also, the tax-sheltered growth within a permanent life insurance policy should not be overlooked.
After carefully reviewing their list, Jack and Diane chose the strategies most important to them and adopted these as their New Year’s Financial Resolutions. With the help of their financial advisor, they’ll get their year off to a good start. They will monitor their progress towards achieving their goals by doing periodic reviews.
Would you like help with your personal financial resolutions?
Call me today, to set up an appointment to review your goals and objectives and to ensure that your current investment approach will allow you to fulfill your goals.
Also, visit my business website (myfinancialsolutions.ca) for additional financial information on insurance, retirement/estate planning, investments and whole host of other financial topics.
Robert Hughes,
P. Eng., CFSB, CFP, CPCA
