Important Financial Actions To Take Before The End Of The Year
By Jeffrey Ady
If you feel like someone tossed 2020 in a blender, pressed start, and threw everything in an uproar, you’re not alone. Most, if not all of us, have experienced canceled plans, work stoppages or adjustments, complicated family decisions, and (as if that weren’t enough) financial challenges. To add to the uncertainty, we don’t know what the near future will bring in regards to COVID-19, political turmoil, and our markets. How do you prepare when there is so much unknown? How can you look ahead to 2021 when you don’t even know what next week will bring? You go back to the basics. Here are 7 financial actions that could make all the difference as we near the end of 2020.
1. Rework Your Budget
Even if your income hasn’t been affected by COVID-19, it’s likely that your spending has. Whenever you experience life changes, it’s wise to take another look at your budget to make sure your spending is in line with your goals and shift things around to manage your priorities. For example, this year might have shown you the importance of having financial margin and now you want to double down to get rid of debt. It’s also possible that many of your daily expenses have experienced some ups and downs. You might be spending less on gas and eating out, but more on groceries, masks, and online shopping, not to mention that prices on many basic items have increased. If you have experienced income changes, make sure you factor those in and adjust your spending accordingly. Go into 2021 with a rock-solid budget that helps you feel financially secure.
2. Adjust Your Goals and Set New Ones
Don’t be afraid to set new goals for 2021. Look at your new budget and priorities and find ways to work toward your savings goals. Get creative with things you want to accomplish next year. You may not be able to take that international trip you’ve been dreaming about, but you can get your family together for a local vacation or refocus your energy on tackling a home renovation. If you’re planning to retire, relocate, sell your business, or make any other big financial moves, identify now what changes you can make to smooth the transition.
3. Don’t Skimp On Your Savings
If there’s one thing this year has taught us, it’s the importance of having an emergency fund. If you haven’t already, now is the time to ensure that you have enough money set aside to cover 3-6 months of necessary living expenses or unexpected extras. While these savings should be easily accessible, you also want your money to be working for you. Contact us to learn about options that will keep your money liquid but also pay a competitive interest rate.
And while things seem uncertain, don’t shrink back from saving for the future or try to wait things out. Consistency, compound interest, and effective, diversity asset allocation makes all the difference in the growth of your investments. If possible, max out your contributions to your RRSP by the end of the year to make the most of your retirement savings. For 2020, the deduction limit is $27,230. You might also consider contributing to a TFSA. In 2020, you can put up to $6,000 in this account. Finish the year strong by investing in your future!
4. Revisit Your Plans And Policies
Along with updating your budget, take another look at your estate plan and insurance coverage. If you took the time and energy to create an estate plan, check it periodically to ensure all the documents are up to date and no major details have changed. If you change a beneficiary in one place, such as a life insurance policy, make sure you are consistent with your other documents to avoid confusion.
Your insurance needs may change as the year goes by, so periodically review your coverages and designated beneficiaries to bring them up to date to reflect your current financial situation. For example, if you paid off debt, you may not need as much life insurance coverage since your family’s liabilities have decreased. You might also want to evaluate your need for other types of insurance, such as long-term care or disability insurance.
5. Give When And Where You Can
The end of the year is always a good time to make your charitable contributions so you can benefit on your tax return, but this year in particular many worthy organizations are struggling to make ends meet. Support local nonprofits or charities that share your values, and make the end of this year brighter for someone else. You can even donate appreciated securities, which may help you avoid paying taxes on the gains.
6. Find An Advocate
If this year has taught us anything, it’s that we all need each other’s support. Before the year is over, seek out a financial professional who can take an objective look at your financial situation and help you take your finances to the next level regardless of what comes your way in the coming months and year. In a time of heightened emotions, dramatic headlines, and a temptation to panic, you need to know you have someone in your court watching out for your money and making sure you are on track to your ideal future.
If you know you need the support of an objective financial professional, our team at Northfront Financial Inc. would love to partner with you on your financial journey. Get started now by calling 403-571-8960 or emailing firstname.lastname@example.org.
About Northfront Financial
Northfront Financial is a boutique full-service financial planning firm serving individuals and families in Calgary, Alberta. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and Certified Financial Planner (CFP) designations. To learn more about Northfront Financial and how we can help you,visit their website and schedule a complimentary appointment.