Financial Checklist for After the Holidays

It’s the beginning of the year, a time to reflect on how did we do this past year, and to see how the new year is shaping up to be. Remember, the key here is to focus on moving forward, not berating yourself for past decisions you can’t change. It’s important to get your finances back on track moving forward.

To help you get started, we’ve compiled a comprehensive financial checklist. This checklist covers various aspects of financial planning, from reviewing your past performance to budgeting for the future, preparing for emergencies, and more. By following these steps, you can ensure that your financial health is in the best shape possible.

REVIEWING

  1. Family Report Card: Sit down for a “family report card” which is essentially a brief financial assessment period with your loved ones. Discuss whether you met your financial goals, paid off the debts you hoped to, and stayed within your budget.
  2. Conduct a General Financial Audit: Review your finances for the past year. Check if you were able to meet your goals, if your monthly budgets worked out, and how your debt repayment plans went.

BUDGETING

  1. Create a Budget for 2025: Creating a budget is a crucial step in managing your finances. It helps you understand where your money is going and how you can control your spending. Follow these steps to create a budget:
    – List your income and expenses.
    – Begin tracking your expenses.
    – Set realistic financial goals.
    – Set budget priorities.

EMERGENCIES AND SAVINGS:

  1. Plan for Emergencies: Set up an emergency fund. An emergency fund is money set aside to cover unexpected expenses. Here are some tips to set up an emergency fund:
    – Open a savings account that is easy to access in case of an emergency.
    – Start by saving a realistic amount: It can take months or years to reach the desired amount for your emergency fund. Even if the amount is nominal, something like $50 per paycheque, it can grow over time.
    – Forced Savings Strategy: Forced savings, also known as paying yourself first, is when you transfer money to a savings or investment account as soon as you are paid.
    – Make it a habit: Automate your savings.

SPENDING

  1. Pause on Spending: Acknowledge if you overspent and then stop spending, even for a few days, except for essentials. Take a break from utilizing those credit cards.
  2. Consider using cash over credit cards: The physical act of handing over cash can make us more aware of our spending. This noticeable exchange of payment for goods is often not felt when using credit or debit cards.

LARGER EXPENDITURES

  1. Plan for Larger Expenditures and How to Pay for Them: Planning for larger expenditures involves setting aside money specifically for these expenses. Here are some steps to plan for larger expenditures:
    a) Identify the larger expenditures you anticipate, such as home repairs, replacing an older vehicle, or upcoming educational expenses.
    b) Estimate the cost of these expenditures.
    c) Start saving for these expenditures in advance.
    d) If savings are not sufficient to cover these expenditures, consider borrowing, but avoid using credit cards for that. Even borrowing at 5-9% interest can be better than the 19% or higher rates on credit cards over a long period.
    – Home Repairs: You can finance home renovations through various options, including savings, a line of credit, a home equity line of credit or a second mortgage.
    – Replacing an Older Vehicle: When replacing an older vehicle, consider factors such as the cost of the new vehicle and insurance. Most dealers offer dealer financing through traditional financial institutions at reasonable interest rates. If that is not an option, or if you are buying the vehicle from a private seller consider a line of credit, a home equity line of credit or a smaller second mortgage.
    – Upcoming Educational Expenses: Planning for educational expenses involves saving money specifically for these costs. Consider options such as Registered Education Savings Plans (RESPs), which are long-term savings plans to help save for a child’s education after high school. If these savings are insufficient, consider a student loan, a line of credit, a home equity line of credit or a second mortgage.

DEBT

  1. Debt Diet: If your household has credit cards, a mortgage, student loans or other debts, it’s time to get serious about paying them off, or at least reducing the balances owing. Review your budget to determine how much money you can apply to debt each month above the minimum payments.
  2. Pay Off Debt: Early in the new year is an excellent time to start planning and taking charge of your finances.

INCOME

  1. Review Your Income: Take a look at your income sources and see if there are opportunities for improvement. This could include working overtime if that is an option, asking for a raise at work, changing careers, looking for a higher-paying job, or starting a side hustle to bring in extra income. Additionally, employers project an average annual base salary increase of 3.6% for 2025, slightly lower than the actual 3.8% increase in 2024.
  2. Contribute to your TFSA: You could earn tax-free income by making investments inside a self-directed Tax-Free Savings Account (TFSA),which is a great tool for saving and investing for both short and long-term goals. For 2025, the annual TFSA limit is $7,000.

INVESTMENTS

  1. Audit Your Investment Portfolio: Review your investment portfolio and make necessary adjustments.
  2. Focus on registered accounts first: Before investing into any unregistered account make sure you contribute the maximum allowed amounts to your RRSPs an TFSAs.
  3. Risk tolerance: Understand your risk tolerance, and don’t get tempted by opportunities to make a quick buck. If something sounds too good to be true, it often is, so exercise caution and do your due diligence before making any financial decisions.
  4. Speak with investment professional: Make sure the advise you receive is from a qualified investment professional.

TAXES

  1. Tax Filing For 2024: Consider contributing to your RRSP account within the first 60 days of 2025 to claim the tax deduction on your 2024 tax return if you have unused room.
  2. Maximize your RRSP Contributions: For 2024, you could contribute 18% of your earned income (up to a maximum of $31,560) to a Registered Retirement Savings Plan.
  3. Sell Positions for a Tax Loss: Consider selling any money-losing positions and/or investments in your portfolio for a tax loss.

MORTGAGE

  1. Mortgage Planning: If you’re thinking of buying a home in the near future, speak with a mortgage broker or lender to find out where you stand financially. More specifically, you’ll want to know how much you can afford and what type of mortgage product might be best for you when it comes time to apply for a mortgage.
  2. First-Time Buyers: If you are buying a home for the first time, consider consulting with a mortgage professional who is knowledgeable about the programs specifically available for first-time buyers. This will allow you to fully take advantage of these opportunities.
  3. Consider Refinancing: Analyze your current mortgage. Is there enough equity in your property? Look at your current rate, and where the rates are right now. Do you carry other high interest rate debt, and would replacing that debt and rolling it in a new mortgage make a financial sense, and will that save you money in the long run? Talk to a professional to analyze the numbers for you, and to compare where would you be if you took that step.
  4. Paperwork: If buying or refinancing is in the plans for 2025, you would need to prepare and organize your paperwork. Your lender will want to know details about your income and job status to make sure your income is sufficient enough and your position is stable enough to continue making mortgage payments throughout the entire term period. Here are some documents that you may need to supply that fall under this category: Pay stubs, T1 tax forms, Notice of Assessment, Letter of employment from your employer, bank statements showing enough down payment in case of buying.

Looking Ahead for 2025

The Canadian economy is projected to grow in 2025. The Bank of Canada has completed its rate hike cycle, and it is widely anticipated that they will lower interest rates to 3% later this month, which is expected to boost household spending and housing activity. However, business investment remains weak, and there is uncertainty due to potential US trade tariffs. The recovery is anticipated to continue, supported by lower interest rates and increased consumer spending.

Review and Adjust Your Financial Plan

Remember, it’s important to review and adjust your financial plan regularly to ensure it aligns with your current financial situation and goals. Keep an eye on your larger goals to guide you through smaller challenges, as they can turn into big problems if not dealt with in time. It’s also a good idea to consult with a financial advisor for personalized advice. This way, you can be prepared to navigate the financial landscape of 2025 effectively.

Conclusion

Financial planning after the holidays is essential for setting a strong foundation for the new year. By reviewing your past financial performance, creating a detailed budget, setting up emergency funds, and planning for larger expenditures, you can ensure that your financial health is on the right track. Addressing debt, reviewing income opportunities, and auditing investments are essential steps to secure your financial future. Additionally, understanding your mortgage options and preparing for tax season will help you make informed decisions. At TheBroker.ca Ltd., we are constantly looking for ways to provide helpful advice related to the economy, mortgages, current mortgage rates, and more.

About Us

At TheBroker.ca Ltd, we understand what needs to be done to secure a mortgage. We can help identify lenders that best match your credit profile. Talk to us. We can offer you helpful advice on getting a mortgage, understanding current mortgage rates, and guide you through the process that will help you make informed decisions that align with your financial goals.

If you have any questions or need further assistance, we offer a complimentary no-obligation consultation. Feel free to reach out to us at (519) 252-9665 during our regular business hours. Alternatively, you can fill out our contact form, and your message will be promptly emailed to us. We value your time and inquiries, and we make it our priority to respond to all messages within one business day. When reaching out, please provide us with your contact details, a brief overview of your mortgage needs, and the most convenient times for you to have a consultation. We look forward to assisting you with your mortgage.

This article was brought to you by TheBroker.ca Ltd., a mortgage brokerage that is licensed with the Financial Services Regulatory Agency of Ontario (FSRA), which regulates businesses in the financial sector. The Principal Broker Sash Trajkovski has over 20 years of real estate and mortgage experience in the Ontario marketplace. You can verify our licenses by visiting the following links from FSRA’s website: our corporate license and Principal Broker license. Our mortgages services are available to all residents of Ontario. If you’re in Ontario and looking for more personalized advice and information, consider booking your Complimentary Consultation today, and let us help you understand the details that will guide you on your path to a suitable mortgage solution.

Disclaimer: Please note that this information is current as of the date of publication and is intended to be general in nature. It is not intended to provide legal, tax, financial, or other professional advice and should not be relied upon as such. Always consult with a professional for advice tailored to your individual circumstances.

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