With the end of 2019 upon us, there are a few financial things you should think about before the clock strikes midnight on New Year’s Eve.
The start of a new year is often a time of renewed focus and can be a catalyst to finally deal with some of the things we’ve been putting off. Our finances are no exception.
With that in mind, here is a checklist of things to address before the calendar turns over.
1. Review your debt and/or savings plan
Deadline: As soon as possible
The end of the year is a good time to take stock of your current financial standing and make a plan for financial success in the new year.
If you have debt, work on a plan to pay it down. If your debt situation is in order, then take some time to map out a savings strategy. How much can you afford to save each month? Should the money go in an RRSP? TFSA? How should you invest it?
2. Get a will
Deadline: As soon as possible
A 2018 poll found that 51% of Canadians don’t have a will. This statistic is troubling for a number of reasons. First and foremost, your will dictates guardianship of minor children. If there is no will, the courts decide guardianship and they may not make the same choice you would. Having a will also expedites the estate process for your surviving family, potentially reducing costs, leaving more money for them sooner. Read more the importance of a will and how to get started.
3. Make RRSP contributions
Deadline: March 2, 2020 for 2019 tax year
Give a gift to your future self by planning an RRSP contribution now. The deadline to contribute for the 2019 tax year is March 2, 2020. Start by figuring out how much you should contribute to maximize your tax savings. Remember RRSPs are essentially a tax deferral program and contribution amounts can be deducted from your income tax return. Also, understanding now how much you want to contribute will help you budget better for what can be, for some, an expensive holiday season. You may also want to consider if a TFSA contribution makes more sense for you – here’s a breakdown of RRSP vs TFSA.
4. Make charitable donations
Deadline: December 31, 2019 for 2019 tax year
If you have a charitable organization that you like to support, consider making a donation by December 31 to get tax benefits for the 2019 tax year. Depending on your income, a $200 donation to a qualified charity could save you about $40 in tax (a combined federal/provincial 20.06% tax credit). If you can afford to donate more, additional donations will garner a 45.80% tax credit. And that’s just a bonus on top of the positive vibes that come from giving. Here are nine tips to make the most of your charity donations, no matter what your income level.
5. Make use of benefits
Deadline: Usually December 31, may vary
If you have extended health benefits, you typically can’t carry forward unused amounts into the new year. So amid the crazy holiday season, why not take some time to take care of yourself? You could go for a massage to relieve the stress in your back and shoulders. Or maybe it’s time to upgrade your glasses. Whatever you might need, now is the time to make sure your health benefits don’t go to waste.
6. Submit work expenses
Deadline: Varies by workplace
If you have reimbursable expenses at work, make sure you check when the submission deadline is and submit these in time so you don’t get stuck with the bill. To ensure you don’t get too far behind with your expense submissions next year, set monthly or quarterly reminders in your calendar to submit.
7. Review assets and capital gains
Deadline: December 27, 2019 for 2019 tax year (to ensure transaction settles by December 31)
If you are expecting to pay capital gains from the sale of a security asset in 2019, you may wish to sell another security asset before December 27 at a loss, if possible, to offset the gain and wipe out the tax. For example, if you sold some stocks at the beginning of the year, you may have realized a capital gain. By disposing of another security at a loss before the deadline, the capital loss can be used to offset the capital gain and reduce your tax burden. We recommend that you talk to your financial institution to make sure this strategy is suitable for you. We recommend that you talk to your financial institution to make sure this strategy is suitable for you.
Looking to get some advice? You can talk to a planner at Vancity about options relating to your specific situation. Not a Vancity member? Open an account online.