Episode 5 – End of Year Financial Checklist


Episode 5 - End of Year Financial Checklist by Astra Financial

A new year is almost here (whew, we made it!) and this is a great time to do a financial checklist to see how you did this year in terms of meeting your goals, paying off debts and figuring out what you want to make happen in the year to come.

In this podcast I’m going over what to take into account when you’re closing out your year so you’re on a fresh new journey in 2021 Don’t worry – this check-in isn’t about being hard on yourself.

It’s about celebrating what you’ve achieved so far and planning out the exciting new places you’re going to go in the coming year.

Show Notes: 

Hello, and welcome back to another round of our Heart of Money talks. This is episode five and today I’m getting straight to the goods and giving you an end-of-year financial checklist. It’s December and it’s time to carve out some space and take a moment to prepare for the next year. Thank goodness we can rip off the 2020 calendar.

I don’t know about you guys, but it has been such a challenging year that I thought could only play out in the movies. So, with the excitement of the possibilities of 2021, because it can only get better, let’s do a little housekeeping to wrap up the end of the year. This will be your checklist episode, short, sweet, quick to the point – I promise. Just a few things for you to think about before the December 31st deadline. So, grab your pen and jot down a few easy things here.

So, first thing is to take 30 minutes to reflect on your 2020 financial year. This is check-in time. Did you meet your financial goals? Did you save what you wanted to save?
Did you pay off the debts that you wanted to? This is time to give yourself a bit of a review. And this isn’t the time to be hard on yourself. This is about celebrating. Look how far we’ve come. What kind of things can we change along the way? sometimes I let the gremlins creep in, and you don’t want that to be here.

This is a time to celebrate – high-five yourself for surviving 2020, and it’s also a great time to just do the check-in right. Did we make the payments that we wanted to, how are we doing financially? Did you pay off certain things or how much farther do you have to go? So, this is a time to put the money shame aside, and those comparisons that we do sometimes where we compare ourselves to other people.

No, this is a time to be easy on yourself. Look at, what kind of things do you need to change or tweak? And give yourselves a pat on the back here.There’s also another thing that I like to do during this check-in time, and because we’re in December, it’s also a great time to do a check yourself before you wreck yourself for Christmas shopping.

So, I share this because maybe this is about me. This is what I need, and I thought I’d share it with you. It’s about giving yourself a budget for the Christmas shopping. So, during this 30-minute review, that hopefully you’re going to do this week, you can also do a check-in for holiday time.This year is a little different. We might not have the same expenses as previous years because of COVID restrictions. It means less visiting, and maybe it means less spending on activities or the groceries if we were going to host a whole bunch of people for a meal, but I find it helpful to set myself a spending limit for the holiday season.

It makes me more mindful and myself. Spending is pre-planned and not so random. I’m going to share with you here a little bit of a personal tidbit that when I let the Christmas holiday spending become random, it usually goes one of two ways for me. It could be, where I overcompensate…I have no idea what to get last minute and it ends up being an over the top gift, like ridiculously expensive, or depending on my mindset, it can be one coming from maybe a place of scarcity, meaning, “Oh, I’ve just spent how much today. Oh, I’ve got another gift.”

I have no idea what to get and it might be something completely thoughtless. It might not be coming straight from the heart and it might be something cheap and just a trinket. This is the time to just take a few minutes during your 30-minutes reflection and plan a little bit of purpose with that spending around the holiday season. Hopefully you don’t share my experience, but I have learned from that, and this is helpful. Okay. On to our second item on the checklist before the end of the year. Do you need to make some moves in your portfolio before the end of the year? So, this is me getting a little bit more technical, but it’s also something that should be in the back of your mind.

We call this sell position for a tax loss. Now I might’ve lost some of you. I know your eyeballs may be rolling in the back of your head because I am starting to talk another language here around taxes and investments, but really this is a way to make a change in your non-registered portfolio that will give you a capital loss to use in the future against any capital gains. So, if you have a non-registered account, all that means is that you’re going to make a change. You might as well do it now before the end of the year if you have a loss because that loss is going to give you a tax break in the future, that you can carry forward against any gains. So, this tax strategy works well.

If you have investments that have gone down and you want to make a change now, you should be taking the advice of a tax professional certified financial planner. So, I’m just giving you a general idea. and so, this is a great time to check in with them, if you’re going to need to do this. Another thing to think about is that if you have a non-registered account and you have room in your tax-free savings account, you can think about transferring from your non-registered account to your tax-free savings, especially if you’re going to be able to use a capital loss. We had a volatile year this year with the markets, things have come back, really well, but maybe there’s something with a little bit of a loss that you were going to use anyway. You can now put it into your tax-free savings account and carry that loss forward.

Make sure though that you talk to your professional, they can give you the tax low down, but this is just something to put in the back of your brain. Add it to the checklist items.
Number three on our checklist is about registered savings planning. You have until the end of February to still add to an RSP for this tax year, but it is a good idea to review and budget in advance of then. It’s really nice to have some purpose around your planning and you don’t really want any surprises.

One of the things that can really hinder your financial planning is if you’re doing it last minute are unthoughtful, not planned out things. Sometimes that happens with the panic of February 28th, knowing that it’s the last day of RSP season, and you might need to do a top-up in your RSP and you’re not really sure what to do.
So, you randomly start picking them out and you do it at the very last minute of the clock. It might work out for you, but really this is all about pre-planning and strategy. Right now is a great time to do it.

Check your income for this year, and see if an additional RSP contribution makes sense by talking with your tax professional or your certified financial planner.
The big questions that I also get is, “Should I save in my RSP or my tax-free savings account?” That truly is a tax answer and that deserves its whole other episode and conversations. We’ll talk about that one down the road, but for right now, you can look at that and sit down with your certified financial planner to talk it out. This should be part of your check-in and review, and they can help answer that.

Right now it is a great time to start, because that’ll give you a couple of months until the RSP season is over. So, start making the plan for the next calendar year now and know where you stand with that regarding your future retirement planning and taxes. So where are you going to allocate your 2021 savings? You should start to look at this now. That is our third item on your checklist item.

Number four, this one isn’t talked about too much. it might not have gone through your brain, but this one is near and dear to my heart – and it’s about charitable donations.
If you want to get a donation receipt for the year you have until December 31st. So, the clock is ticking. Now this applies to not only cash donations, but also a donation of investment. So, you can also donate a portion of your investments and you can invest a stock or send the donation as a stock.

This will be a good time to look at your portfolio and look at the winners in your portfolio. If you’re wanting to make a charitable donation, you can actually use some of your investments for that. And think about if you want to donate to a charity and save some tax along the way, because this is the way to do it. Think of this – if you were to send off, let’s say a stock or a small piece of your investment, think of it as tax gain donating because there’s a special rule that you can receive a donation receipt for the fair market value and not pay the capital gains.

Check with your accountant and your certified financial planner for your individual case. If this is something that you want to do, charitable giving in December feels pretty darn good. Actually, it feels good every month of the year. My local YMCA gets our family support. We do our donations and I’ve also made a donation in my will for them.

The YMCA has a special place in my heart. I grew up there, from being a six-year-old dropped off on Saturday mornings at the front door and given two bucks to buy a hot dog and fries there at the tuck shop and watching Star Trek movies. That would be where I’ve learned to love my sci-fi and Star Trek and Star Wars. They would play the movies all Saturday and we’d run around.

And I met, all the way through middle school and into high school and university, my best friends. I became the leader that I am today because of the local YMCA. So, it feels really good to me to be able to help them out. But I’m also not silly enough to know that I shouldn’t take some tax advantages of that. So, if you have something that is near and dear to your heart, and you do want to give a little bit, making sure that you’ve taken care of your future self as well is important. You never want to put yourself in jeopardy. but there are ways through investments and donations that will actually give you a little bit of an extra boost at tax time. So just something to think about, put it in your brain and soak it in if that’s, something important to you.

All right. So, this is my last for the checklist. Don’t worry. we’re almost there. This one’s easy and maybe a little bit more fun, because this is about using all your benefits before the end of the year.

This is the flex accounts; the health spending accounts. This is money that needs to be used before the end of the year before you use it or lose it kind of idea. So typically most places don’t allow you to carry forward these unused amounts. Amid this crazy holiday season, you have these last few weeks to take advantage of maybe all of your massages.

You haven’t used all your chiro or acupuncture. Take a look at your health benefits and see what you can use before the end of the year. I have a few friends that are massage therapists and they say December is their busiest time of year because of this. I also know that certain dental benefits are like this. In our family, my husband and I – who I’m still determining the difference between cheap and frugal with him – talk about this.

But to his advantage, I will say that he has planned his dental work, through December and into January. He has multiple crowns that he had needed and they had a cap on the amount that he could spend. And so, he made sure to start the work in December, and then it carried over to the next calendar year when the dental benefits kicked in.

And so, I actually think it was pretty smart and he did a good job with that, but this might be a good time to take a look at your benefits and see how you can use them and not lose some extra money that your employer might have put aside for you.

So, there you have it, that’s it. This is your checklist.

I hope you found it helpful, easy and I didn’t blow your brain…it wasn’t too hard. just some things for you to go through and start doing before the end of December. So, take care and we’ll talk again soon. Thanks!