Your 2013 recipe for $$ success

Your 2013 recipe for $$ success

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A new year and a time for renewal – the time when many people look into their past and future and resolve to make changes for the better. Your overall quality of life is directly related to the overall quality of your finances, so getting your financial life in order should be near the top of your list. Here are 10 essential financial planning tips to make that resolution a 2013 reality.
1. Set a budget and stick to it. Take a critical look at your income and expenses and set a realistic monthly budget that includes an amount for saving and investing.
2. Get your debt under control and keep it there. Develop good spending habits and use debt wisely. Always pay off credit cards and other high-cost, non-tax deductible debt first.
3. Maximize RRSP contributions. Investing in RRSP eligible investments is the best tax-sheltered savings builder for most Canadians. Strive to make maximum contributions for faster and bigger potential investment growth.
4. Develop an education savings plan for your children. A tax-sheltered, compound-growth Registered Education Savings Plan (RESP) eligible investments are an excellent way to cover escalating education costs and give your kids a head start on life.
5. Be a prudent money manager. Carefully consider each dollar before it’s gone. Start with a careful and critical assessment of your life goals and your income and set aside enough on a regular basis to achieve those goals.
6. Check and revise your insurance coverage to match changing needs. As your life changes your need for income protection and estate planning changes. Be sure your insurance coverage keeps pace.
7. Make “tax-efficient” investment decisions. Certain investments are more tax-efficient than others. For example, interest income is taxed significantly higher than dividends and capital gains – so it’s often better to hold investments that earn dividends and capital gains outside your RRSP eligible investments and interest-earning investments inside it. Take advantage of the Tax-Free Savings Account (TFSA) eligible investments, which allows investment income to grow and be eventually received on a tax-free basis.
8. Establish an asset allocation plan that complements your financial planning needs. An effective asset allocation plan delivers a portfolio that includes the right balance of assets from the three asset categories – cash, fixed income investments and equities – for steadier, long-term growth.
9. Minimize your taxes. Take advantage of all the tax deductions and tax credits available to you including moving expenses, child care expenses, tuition fees, medical expenses, charitable donations, and safety deposit box charges.
10. Develop a financial plan and stick to it. A consolidated financial plan – plus the help of a professional advisor will keep you on track to achieving your dreams.

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