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Retirement savings

January 08, 2014

20 smart money moves

Looking for a New Year’s resolution? How about 20 of them? Tackle even a few of these and you’ll set yourself up for success.

The Lovely Lisa has decided our whole family should commit to New Year’s resolutions. Anthony is going to spend more time tobogganing, Grace wants to improve her personal best cross-country running time and I’m down for a Today’s economy e-book. Lisa thus far remains noncommittal. She has until Friday to come up with something or the kids will decide for her. (In fairness, I may not have made that clear until now.)

Perhaps you, too, are finding it difficult to focus your brand-new-year best intentions. No worries. Here are 20 smart money moves you can make this year:

  1. Prepare a budget. Or update the one you’ve already got. Make sure it’s realistic, of course, and then stick to it as best you can.
  2. Pay yourself first. It’s one of the most important rules of personal finance, and yet it’s seldom practised. Save an affordable amount every month before you pay bills or make any discretionary purchases. Make it an automatic deduction so that you never see the money and aren’t tempted to skip a month.
  3. Build an emergency fund. You can use a tax-free savings account, but that’s not necessary. What matters most is that you think about how much you need to have on hand in the event of an emergency and that you start to save toward that goal.
  4. Maximize your employee benefits. This includes both retirement savings and health benefit plans. Call the company that administers these plans on behalf of your employer and ask them everything you’ve always wanted to know. They’ll be glad to help. Make sure to ask about how to get the most out of your plan. For example, a lot of employers match the retirement plan contributions that employees make up, to a certain level. It’s free money that a remarkable number of Canadians leave on the table every year.
  5. Buy something you need right now. That winter coat you’ve been putting off buying? It’s cheaper right now than it will be all year.
  6. Sign up for the Canadian Securities Course. Offered by the Canadian Securities Institute, this course is an investor’s best friend. The textbook itself is worth the price of registration.
  7. Prepare your will. Or update the one you’ve already got. Estate planning is a must.
  8. Don't do your own taxes. For most people, the decision to have a chartered accountant file your income taxes for you will save more than it costs.
  9. Subscribe to a source of quality financial news reporting. My two favourites are The Globe and Mail and The Economist. There are plenty of others, of course. Pick one and stick with it.
  10. Read David Chilton. Or Gail Vaz-Oxlade. Or Bruce Sellery. Or Preet Banerjee. Or Rob Carrick. We’re lucky to have a host of top-notch personal finance writers in this country. They belong on your e-reader.
  11. Share all this with your kids. Teach them why money is important and how to respect it. You’re going to need them to take care of you one day.
  12. Brown-bag your lunch. Maybe the easiest way to save $50 a week.
  13. Write up a list of short-term financial priorities. Think in terms of the remainder of the decade, and make sure you choose goals that are attainable.
  14. Write up a list of long-term financial priorities. Don’t be afraid to include one or two stretch goals. But make sure you have an updated financial plan to get you there.
  15. Meet with a financial advisor. Share your financial priorities, and get input on how to make your plan a reality.
  16. Get a handle on your net worth. Total up your debts and assets. It’s an eye-opening experience.
  17. Spend an hour explaining your finances to your spouse or partner. It’s not uncommon for one partner to take the lead on the family finances. But it’s a mistake that can cost the other dearly if tragedy strikes.
  18. Get a library card. And then refer back to tip #10.
  19. Subscribe to the Money for Life newsletter. Get personal finance tips every month.
  20. Rebalance your portfolio. The percentages you originally allocated to stocks, bonds and other assets change as a result of market volatility. It’s important to go back regularly and reset them.

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