The year 2017 is just around the corner and it is time to reflect on days gone by and make solid plans for the future. Here are some worthy financial resolutions to consider for the New Year:

Set a Budget

Make a Budget

Making a budget and sticking to it is difficult! My wife and I routinely assess our finances to see how robust we are financially. Our end of year assessment involves looking closely at our average monthly expenses and making reasonable projections for the future.

We will also be considering any big-ticket items that are required in the near future and looking for opportunities to trim some regular expenses so we can accommodate spending on these items, if possible. Our budget is never “set in stone”, but it helps to keep us aware of our financial strengths and weaknesses.

Pay off Debt

Pay Off Debt

In the second quarter of 2016, the ratio of Canadian credit market debt to disposable household income climbed to 167.6% (i.e. owing $1.68 for every $1 of disposable income). At a total of $1.97 trillion, credit market debt exceeded the GDP for the first time.

Not all debt is bad. However, high interest debt (such as credit card debt) is not so good. There is no point investing in the market for a 4-7% return while you are still paying 19.99% or more in credit card interest to the bank. It just doesn’t add up. If  you have significant credit card debts, consider transferring your balance to a low interest transfer credit card. This will enable you to apply a bigger portion of your monthly payment towards principal reduction instead of interest charges, getting you out of debt faster.

We use our credit cards to pay for most purchases, so we can earn reward points and cash-back. However, we ensure that all balances are paid off within the 21-day grace period. After buying our first home in Canada this year, we partially funded a new roof using our line of credit. We have been setting aside about $750/month to pay back the line of credit and plan to settle that account by end of February 2017.

Related: 10 Ways To Avoid Getting Into Debt

Save for Retirement

Save for Retirement

If you are not already saving for retirement, now is the time to start. Time is money and time waits for nobody! Compound interest is only your friend when you have time on your side. Open that RRSP account. If you have access to a Group RRSP, maximize your contribution.

Related: Group RRSPs – Don’t Leave Money on the Table.
Related: What is an RRSP?

Saving for retirement is especially important for “New Canadians” who need to supercharge their retirement savings in order to catch-up on lost time. If you are a recent immigrant who does not have RRSP contribution room because you are just starting out, consider putting your money in a TFSA.

My employer offers a defined benefit pension plan that deducts 9% of my salary at source as my contribution to the plan. I plan to contribute the remainder of my RRSP contribution room for this year (after pension adjustment) to a spousal RRSP account for my wife as part of a tax savings strategy.

Get Financial Education

Get financial Education

The result of a study carried out by Statistics Canada in 2014 showed that 31% and 43% of women and men respectively, considered themselves financially knowledgeable.

Financial literacy is important. I plan to do more reading in the coming year – 12 books minimum. Some of the books in my library currently waiting to be read include: One up on Wall Street by Peter Lynch, The Four Pillars of Investing by William Bernstein, The Black Swan by Nassim Taleb and Trading in the Zone by Mark Douglas.

And not just financial literature, it’s important to keep abreast of what’s going on around you. Read widely! Read voraciously! Tell A Friend

Build an Emergency Fund

Build an Emergency Fund

Unexpected emergencies and expenses are a part of life. Be it a job loss, medical emergency or home repair, having an emergency fund may save you from drowning in high-interest debt. It is recommended that you have 3-6 months worth of living expenses saved in an emergency fund. A high interest savings account (HISA) is a good option for keeping your emergency funds.

In 2016 we bought a house and all our savings went into paying for the down payment, closing costs, and other house related expenses.  We plan to make savings for an emergency fund a priority in 2017, even if it means putting away as little as $200 per month in a HISA.

Create Multiple Streams of Income

Create Multiple Streams of Income

As a father to two kids, my expenses keep increasing. If we want to be able to contribute to our kid’s RESPs while also maximizing our RRSP contributions, we need to boost our income. My business plans for next year include monetising this blog and venturing into custom website designing. I have built a couple of websites over the years and plan to leverage on the experience gained so far in creating income. Last month, I got my first gig to build a website for a friend… it’s starting to look exciting!

Become an entrepreneur. Diversify your earnings. Create additional income doing what you like doing. One of the easier ways to boost your financial profile and meet your financial goals may be to simply make more money.

Save for Kid’s Post-secondary Education

Save for your Kid's Education

The Registered Education Savings Plan (RESP) is an excellent tool to save for your children’s future educational pursuits. If you are already contributing to a retirement plan, also consider setting up an education fund for your kids. It makes financial sense to utilize the RESP to fund your child’s college education when you consider that the government contributes up to $7,200 in free money plus compound interest.

In 2017, I plan to manage both our kid’s RESP’s using the TD e-Series funds.

Related: How to Open a TD e-Series Account

Give Generously

Give Generously and Help Others

Canadians give to charity and it is a good thing! The total amount of donations made to charities in 2013 was $12.8 billion, with an average $531 per donor. Consider giving to charitable causes you believe in. Give your money, time and some love to those who need it! We plan to do more of this in 2017.

Review your Credit Report

Review Your Credit Report

As you work hard to improve your credit score, it is also important to annually review your credit report for any anomalies that may damage your credit history. You are entitled to a free credit report from Transunion and Equifax once a year.

You can also obtain a free credit score from Borrowell (Note: You do not have to apply for a loan in order to get your free credit score). I take a good look at my credit record every year to ensure there are no errors.

Related: 10 Ways To Improve Your Credit Score

Rebalance your Investment Portfolio

Evaluate your investment portfolios and ensure that they meet your current needs and risk profile. If you are into DIY investing, remember to review and rebalance your portfolio. I have my TFSA and one of my kid’s RESP’s in TD e-Series funds. I rebalance the portfolio at the start of every year to ensure that individual funds are in line with my preferred asset allocation.

May 2017 be your best financial year yet! Click To Tweet