Friday, December 10, 2021 / by Mario Daniel Sconza
2021 is winding down and if you are a little shy of your goals or looking for some last-minute financial fixes to end off the year and set you up for an even better 2022, we have a few suggestions for you.1. If you don’t have a TFSA or RRSP, take it off your wish list and get one (or both) before the end of the year. The process is free, can easily be done online, and there is no minimum deposit amount required with many institutions. RRSPs give you immediate tax savings but there are penalties for early withdrawal, so it's best to leave your money in there until retirement (unless you are taking advantage of the Home Buyers' Plan) . A TFSA offers no tax deduction but withdrawals are tax free and not penalized (there are a few rules you need to be aware of), so they offer a greater degree of flexibility than a RRSP.2. Gain control of your monthly spend and stop wondering where your money goes every month. As proven by a number of bankrupt celebrities and athletes, regardless of how much money you have coming in, not tracking how much is going out and where it's going is a recipe for disaster. If you need help, we have a great webinar coming up on December 14 to show you how to easily analyze and manage your cashflow.3. Automate your savings. Making your money invisible by setting up automatic transfers every payday to a savings account will remove the guesswork and excuses from saving money. Money left in your daily chequing has a way of disappearing!4. If you are carrying a balance on your credit card, map out a realistic payment plan for an all out attack on that debt in 2022. Paying the minimum on the average Canadian credit card debt of $4000 will require 211 months to pay off. Paying the minimum plus and additional $100 will cut that down to 31 months and save you almost $3000 in interest charges! Balance transfer cards are another option if you can pay it off before the promo rate expires.4. Invest your free cash. A "hi-interest" savings account is a huge misnomer these days as you would be lucky to get 1% interest. Same goes for any cash sitting in your RRSP, TFSA, or your child's RESP. The latest inflation figure is almost 5%, which will leave any cash on hand today worth around 4% LESS this time next year. Inflation is hard to predict but the forecast at the low-end is around 4%. Check out this video if you are wondering how and when to get invested in the markets.5. Investigate mortgage options. You could try and downsize your home if you want a lower payment, but it's a big decision, a lot of time and effort, and it may not be possible in your housing market. If you haven’t looked into refinancing at a lower rate and/or consolidating some other higher interest debt into your mortgage, call a mortgage broker and get them to run some numbers. A variable rate mortgage is around 1% below a fixed rate mortgage and even if rates start to climb in 2022, it will take a while to narrow that gap. It depends on your aversion to risk and how much uncertainty your situation allows.6. Rethink how much you spend on car(s).They can easily be bought and sold and there is almost always a cheaper option. Attachment to a car is usually much more emotional than rational, so it's less about giving up a real need and more about feeling good behind the wheel. If you are comparing car alternatives, make sure you factor in gas, insurance, parking, repairs & maintenance, in addition to the monthly payment.7. Top up the kid’s RESP as best you can before Dec. 31. Deposits up to the $2500 annual limit will receive a 20% grant from the federal government. If you miss a year, you are allowed to overcontribute to some extent in future years, but playing catch-up is hard — just dump in whatever you can before year-end.All of the above tips came from our free, weekly livestreams. Check out the schedule below to see what's coming, or watch any of our past sessions on our YouTube channel. There is tons of great information on saving, investing, budgeting, retirement planning... and lots more!
ResourcesHouse Flippers Beware: The CRA is watching!The Liberal Government has legislation on the table to remove the Personal Residence Exemption (PRE) for home sales within 12 months of purchase, but that doesn't mean you are out of the woods if you have abused the PRE in the past.Cost cutting tips not really cutting it for low-income earnersIs depriving oneself of an occasional latte or a quality mobile phone really making an impact on the household budget, or is that advice just for those who have a lot more cash to cover the necessities?When to buy life Insurance?A great primer with some good advice. If you are looking for the complete story on insurance, make sure to join us next week four our "Demystifying Insurance" webinar.How to protect your savings from inflationGlobal news checked in with two personal financial pros to see what, if anything, Canadians can do to protect their savings as the inflation rate soars to 5%.Financial terms glossaryTired of trying to get up to speed on your finances only to be derailed by the lingo? You can scan this glossary in 30 seconds and we guarantee there will be a few entries that will get your mouse clicking!