December is here, and we’re just a month away from 2025. The new year and holiday season bring excitement and joy, but it’s also essential to review your finances and plan for the year ahead.
Here are some financial checklists you can use to get your financial house in order before 2025. For detailed explanations on each heading, please click here.
Conduct a General Financial Check
Take a quick look at your finances for the year.
Budget: Are you within your budget this year? Are you overspending or underspending? Now is a good time to review your income and expenses and adjust your budget accordingly for next year. If you have leftovers in any category, consider moving them to your emergency fund or investments.
Debts: If you have any debts, are you on track with paying them off?
Emergency funds: Do you have enough cash on hand to cover your expenses for 3-6 months?
Insurance coverage: Are you adequately protected against unforeseen and potentially disastrous life events? Take a moment to review and update your policies as needed.
Estate planning: An estate plan is the process of forming a detailed plan for how your assets will be distributed upon your death, with a focus on minimizing tax liabilities. If you already have an estate plan, year-end is a good time to review and adjust where needed. For example, your net worth might’ve changed, meaning distribution and related taxes need to be reconsidered. Update your estate plan or will. If you don’t have an estate plan, now is a good time to create one.
Optimize Your Registered Accounts and Contributions
TFSA
For 2024, the annual TFSA limit is $7000, not including the contribution room you may have carried forward from previous years. If you still have TFSA room available, consider contributing to your TFSA and take advantage of the tax-free growth on your savings account or investment portfolios.
If you are looking to make a TFSA withdrawal soon, consider doing it before the end of the year. This way, you can re-contribute the amount from day one of the new year.
RRSP
For 2024, you can contribute 18% of your earned income (up to a maximum of $31,560) to a Registered Retirement Savings Plan. If you have not used up your eligible RRSP limits in previous years, your contribution room would be higher.
Consider making a contribution to your RRSP account within the first 60 days of 2025 to claim the tax deduction on your 2024 tax return. If your employer offers an RRSP contribution match, make sure to contribute the maximum to avoid leaving free money on the table.
Make RESP Contributions
A Registered Education Savings Plan (RESP) helps you save for your child’s post-secondary education. It’s always a good idea to maximize your RESP grants. If there’s still some room, consider contributing extra.
Each year you contribute to the account, the government matches your contributions at a rate of 20 cents per $1 contributed, up to a maximum of $500 per year.
Prepare for Tax Season
Unless you are self-employed, you must file your 2024 income tax return by the end of April 2025. Start gathering the documentation you need for tax time to ensure you don’t miss out on important tax deductions and credits.
Plan for the Future
Maybe you had some shortcomings this year. You can avoid the same problems in the coming year by planning well ahead.
Take a look at your budget to determine if you need to tweak it to accommodate your new financial goals. Do the same for your insurance and estate plan.
Confused Where to Start? Reach Out for More Information
If you’re struggling with your finances or aren’t sure how to achieve your goals, I can help.
