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Financial planning 101: Start here

Does the “F” word make you uncomfortable? If your finances feel out of control, it’s natural to want to avoid thinking about them. Distress about money can lead to “financial inertia” — that inability to get started and work on your financial life. But it doesn’t have to be that way!

Start here: Choose just one thing — the easiest task for you to do — from the list below.

Set a deadline for yourself in your calendar, with timely reminders. Start small, make a commitment, and look forward to financial peace of mind.

Choose a task

Getting Organized

  • Go paperless. Good for you — and good for the environment! Most companies can send you e-bills and e-statements that will remain accessible for about seven years. This is also true for the Canada Revenue Agency. Discard the financial papers you don’t need, and consider signing up for paperless e-statements going forward. Clearing paper clutter is an easy way to start feeling more in control.
  • Compile a list of your digital assets. Financial accounts, email and social media accounts and data stored on computer hardware — all these “digital assets” will need to be dealt with when you die or if you become incapacitated.

TIP: Make a list of your username/email and passwords, and share it with someone you trust.

  • Check your credit report. Reviewing your credit report can ensure you aren’t penalized for inaccuracies when you apply for credit in the future. If you notice anything inaccurate, let the credit reporting agency know, and they’ll work to get it fixed. You can request a free report by mail from Equifax and TransUnion or pay a fee for instant access online at Equifax’s and TransUnion’s websites. A free credit score report may also be available to you through your financial institution; ask in branch or check online.

Doing taxes

  • Review your tax instalment payments. If you had a significant change in personal or business income, you might be able to reduce your quarterly tax instalment payments and better manage your cash flow. Talk to your accountant to see if this makes sense.

Saving and investing

  • Revisit your risk tolerance.  Make sure you’re comfortable with the risk level in your portfolio. Talk to your MD Advisor* to figure out whether you need to adjust your portfolio and financial plan.
  • Consolidate your registered accounts. If you have registered accounts such as registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), registered education savings plans (RESPs) or tax-free savings accounts (TFSAs) at multiple financial institutions, consolidating them has several benefits, including better planning opportunities.
  • Automate your savings. Figure out how much you can save or invest — maybe it’s only $25 a month (you can always adjust this amount after you’ve started). Then set up an automatic transfer of funds from your chequing or savings account into an investment account, such as an RRSP or a TFSA. It’s called a pre-authorized contribution (PAC) plan or automatic savings plan (ASP) — we call it an easy and effective way to save.

Managing debt

  • Consolidate your debt. If you have a mixture of credit card debt, student loans and a line of credit, consider consolidating the debt into a line of credit with one monthly payment. Paying off higher-interest-rate debt with lower-rate debt can lead to significant savings and simplify your financial life.
  • Review auto withdrawals on credit cards and bank accounts. Have you subscribed to more streaming services than you need? These and other monthly costs are easy to forget. Look through your statements over the past few months and re-evaluate what you really need.

Planning for the future

  • Create or update your will. Your will lets you dictate how your assets will be distributed and who handles your affairs when you die. You could help your beneficiaries avoid a lot of issues and save a lot of tax by having one. A will is part of your overall estate plan, which could also include powers of attorney,1 beneficiaries for your registered plans and life insurance.
  • Review your life insurance coverage. Do you have one or more life insurance policies? Add up your total benefit and determine if it would adequately take care of your beneficiaries based on your current situation. Make sure the beneficiaries you designated on these policies reflect your current wishes and circumstances.
  • Set up a virtual meeting with an MD Advisor. What can you expect when you meet with an MD Advisor? They can help you with all the above financial planning or answer questions about any of the tasks you’ve selected.

Completed your task?

If you find that you easily finished one task, choose another one. You can overcome financial inertia and start planning with confidence!

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.

1 In the province of Quebec, a “power of attorney” is called a “procuration” or a “mandate.”

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.