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A financial plan for the New Year that won’t overwhelm you

Young parents sit on couch while children play around them

If this last year has been financially overwhelming for you, it’s natural to want to avoid thinking about it. Distress about money can result in “financial inertia” — that inability to get started and work on your financial life.

We suggest you choose just one thing — the easiest task for you to do — from among the list below. Set a deadline for yourself in your calendar, with timely reminders. Start small, make a commitment and look forward to an improved financial life.

Choose just one task

  • Apply for support measures. If you’re eligible for COVID-19 government support measures, such as Canada Emergency Business Account or the Canada Emergency Wage Subsidy, be sure to apply before the deadline. This could result in collecting the financial support you deserve to help with expenses you continued to pay while your income was reduced.
  • Review your tax instalment payments. If you had a significant decline in personal or business income, you might be able to reduce your quarterly tax instalment payments and better manage your cash flow. Talk to your accountant to see if this makes sense.
  • Revisit your risk tolerance. Did you sell investments in the spring and haven’t re-invested? Or did you stay invested but lose a lot of sleep? Make sure you’re comfortable with the risk level in your portfolio. Talk to your MD Advisor* and figure out whether you need adjust your portfolio and financial plan.
  • Manage your financial mail. Most companies can you send you bills and statements electronically and remain accessible for about seven years. This is also true for the Canada Revenue Agency. Discard the financial papers you don’t need and consider signing up for e-statements going forward.
  • Compile a list of your digital assets. From financial accounts, email and social media accounts, data stored on computer hardware, your “digital assets” will need to be dealt with when you die or if you become incapacitated. Make a list of your username/email and passwords and share this with someone you trust.
  • Consolidate your registered accounts. If you have registered accounts such as RRSPs, RRIFs, RESPs or TFSAs at multiple financial institutions, consolidating them has several benefits including better planning opportunities.
  • Review auto withdrawals on credit cards and bank accounts. Have you subscribed to more streaming services than you need? These and other monthly costs are easy to forget. Look through your statements over the past few months and re-evaluate what you really need.
  • Set up a pre-authorized contribution plan. Figure out how much you can save or invest, especially if your personal expenses were lower this year. Then set up automatic direct funds from your chequing or savings account into an investment account, such as an RRSP or TFSA. It’s an easy and effective way to save.
  • Check your credit report. You can request a free report by mail from Equifax and TransUnion or pay a fee for instant access online at Equifax‘s and TransUnion‘s websites. You can also access your credit score for free through your financial institution, if available. Reviewing your credit report can ensure you aren’t penalized for inaccuracies when applying for credit in the future. If you notice anything inaccurate, let the credit reporting agency know, and they’ll work to get it fixed.
  • Consolidate your debt. If you have a mixture of credit card debt, student loans and a line of credit, consider is consolidating the debt into a line of credit with one monthly payment. Paying off higher-interest rate debt with lower rate debt can lead to significant savings and simplify your financial life.
  • Create or update your will. Your will1 lets you dictate how your assets are distributed and who handles your affairs when you die. You’ll avoid a lot of issues and could save your beneficiaries a lot of tax by having one.  A will is part of your overall estate plan, which could also include powers of attorney2, registered plans, and life insurance.
  • Review your life insurance coverage. Do you have one or more life insurance policies? Add up your total benefit and determine if it would adequately take care of your beneficiary based on your current situation. Make sure the beneficiaries you designated on these policies reflect your current wishes and circumstances.

If you find that you easily finished one task, choose another one. You can overcome financial inertia!

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.

1 In the province of Quebec, notarial wills do not require probate, whereas the majority of other wills do require probate and are subject to a fixed application fee. All references to probate and probate tax in this document should be read accordingly.

2 In the province of Quebec, a “power of attorney” is called a “procuration” or a “mandate.”

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.