7 quick actions you can take this month to improve your financial health in 2021.
2021 will be a year of many challenges. While yesterday’s inauguration of Joe Biden as President of the United States and the rollout of vaccines offer some hope, many of us will remain focussed more this year on surviving than thriving.
Still, it’s very important not to lose sight of the little things we do every day, every week and every year that have allowed us to thrive – as individuals, as a community and as a country.
So let’s look at a few key financial actions you should consider this month to start off your financial year strong:
Review your retirement plan with your advisor. Make sure you’re on track for this year and the next three to five. Don’t have a financial plan? Get one. Now.
Pay Off The Holidays
For many – those who have lost their jobs or had their income reduced – the Holidays were a very difficult time last year, for sure. For most of those who didn’t face those financial challenges last month, the Holidays were still likely more modest than in the past. If you used credit to pay for the Holidays, your focus should be on paying that down as soon as possible.
For 2021, the TFSA contribution limit remains $6000. That means $75,500 in total contribution room has been made available to a Canadian who was 18 in 2009. January is a great time to top that up if you have some cash sitting around. Not sure you can put it away long-term? The TFSA allows you to withdraw it at any time with no penalty. Don’t have cash, but you do have a non-registered account? Move money from the non-registered account into your TFSA for long-term tax savings. Just make sure you watch out for capital gains on the existing investments. The TFSA is also the ideal place to put your tax refund this spring.
Those who know me know that the TFSA is my darling. Still, the RRSP has its purpose. Most Canadians struggle with the question of whether to contribute to their RRSP or not, especially before March 1. If you’re unsure, talk to your advisor and look closely at how a contribution will impact your taxes today and in retirement.
January is a great time for those with a Registered Retirement Income Fund (RRIF) to review your 2021 payment amount and frequency.
Everything you do that relates to your finances – investments, insurance, retirement planning, even your child’s education – can’t be done without considering the tax implications. Plus, this is the best time of the year to prepare for filing your 2020 taxes: gather and organize receipts and decide on a timeline to prepare and file your return.
If you’re working with an advisor, you’re paying them. Review the fees you pay and assess whether you’re getting good value for your money.
For more information, please contact Balance Financial