15 Money and Financial Planning Tips for 2015 - From Lise Andreana

I love the number 15 since my birthday falls on the 15th of the month and in 2015 I will reach a landmark birthday! Sssshhhhhh! From the perspective of time past, and with over 20 years of helping people to achieve their financial goals, it is easy to see those who have made their dreams a reality and those who have fallen short. The major difference between these two groups is habits. As 2015 kicks off, it is a good time to reflect on your financial goals and the habits you need to develop to achieve success. Here are 15 tips designed to improve your relationship with money in 2015.

1. Before taking on more debt or a large expense consider how secure your pay cheque is. Once a new cost like a bigger mortgage or a second car is taken on, it may be very hard AND expensive to scale back.

2. If you do not already have one, build up an emergency fund equal to at least three month's income. That way you will be prepared when the unexpected happens.

3. Avoid unnecessary fees and interest charges. Never carry credit card debt, the interest rate charges can exceed 20%. Those charges eat away at your ability to save for your important goals, like buying a home, saving for your children's education, and retirement. Pay your bills on time. Paying bills or credit cards even a few days late can affect your credit rating.

4. Does your employer offer a retirement savings matching plan? Many Canadians neglect to sign up for this free benefit. Take advantage of your employer's generosity, sign up and contribute to your employer's retirement matching plan. Typically these offer a $1.00 match for every $1.00 you contribute. Where else can you get a 100% return on your investment?

5. Top up your savings to RESPs, RRSPs and TFSA. Resolve to increase your contributions this year. By increasing your contributions by a mere 5% annually you can painlessly increase your overall savings.

6. Insure smart by insuring what is important. How important is it to protect that new printer you bought or next year's vacation? Compare that to the importance of protecting your family's income during sickness or your premature death. Check your employer's disability insurance program and top it up if necessary. Employer group life insurance plans are notoriously low. If you are raising a family, make sure your life insurance coverage exceeds 10 years income.

7. Raising a family on a budget? Buy low cost term insurance. Making big bucks? Are you in a high tax bracket? Check out cash value life insurance as a tax sheltered savings vehicle and estate preservation tool.

8. Check the amortization period of your mortgage. Does it coincide with your expected retirement date? If not, ask your mortgagor how to increase your payments so you can retire debt fee.

9. The beginning of a new year is the perfect time to rebalance your investment portfolio. Book an appointment with your financial advisor and ask them if your asset allocation has changed and how to best get back on track.

10. Check your retirement goal - are your savings on track? Here is a simple test. Take your current retirement savings and multiply by 4% - this is your safe withdrawal rate. For example, $100,000 in savings provides annual income of $4,000. Add to this what you expect to receive from CPP, OAS and other pension plans for an idea of your retirement income. How does this compare to your retirement income goal? Can you retire now, or should you keep working and saving?

11. Planning to retire early? Consider how your life expectancy will impact your retirement lifestyle. Retiring too early means forgoing additional years of savings and the longer your savings will need to last. An extra year or two of working and adding to savings can make all the difference between a frugal retirement and a comfortable one.

12. Take the time to review the beneficiaries listed on your RRSPs, TFSA, and life insurance policies. After all, your circumstances change over time, so might your wishes for your estate. Your financial advisor has many good ideas to help you plan your affairs in a tax efficient manner that meets with your wishes.

13. Resolve that this year is the year you get a will! Too many of us put off having our wills written. Dying without a will leaves your loved ones with an enormous burden and may even see your assets go to unintended beneficiaries.

14. Make your charitable donation as tax efficient as possible. Donate appreciated investments in kind where ever possible and avoid paying capital gains tax.

15. Plan to keep your financial house in order. Working with one of Continuum II's CFPs (Certified Financial Planner) will help ensure you set realistic goals and put a strategy in place to meet them on your timeline. The good financial habits you put in place this year will last you a lifetime.