Every new year gives us the opportunity to reflect on the past one, re-evaluate plans and move forward with more positive habits. Now could be the perfect time to look closely at your personal finances to make sure you're on track to reaching your financial goals. Here are five financial resolutions to consider for the year ahead, from creating better spending habits to saving more. 

1. Review your spending and put a budget in place 

Start by asking yourself some questions about your spending in 2020. Did you start last year with a plan on what you wanted to spend? Can you look back and see if and when you went off-budget and why? Did the pandemic affect your expenses? For example, commuting costs were eliminated for at least part of the year. Can you determine where those dollars went instead? 

A good way to approach budgeting in 2021 is to list your values and priorities. Write down what matters to you and work your numbers from there.

2020 taught us that budgets must be flexible. If you overspend in one area, or an unexpected expense arises, you can balance it out by cutting costs elsewhere. The most important thing to remember is to continually check your spending so you can spot problem areas and make changes as you go. 

2. Make paying yourself first a priority 

Paying yourself first means putting dollars towards savings, an emergency fund and your retirement. 

Savings 

Whether you're saving for a vacation next year, a wedding or a down payment on a house, make the most of your dollars by depositing money into different types of savings accounts:

• A Tax-Free Savings Account (TFSA) where your dollars can earn tax-free interest, dividends and savings.
• A high-interest savings account (HISA) operates like a traditional savings account but has a higher interest rate.
• A guaranteed investment certificate (GIC) is a special investment that offers a guaranteed rate of return over a fixed period of time. 

Emergency fund

While you should aim to have approximately six months of living expenses in an easily accessible account, don't be intimidated if you start with much less. Any cash-on-hand will help you should an emergency arise. An emergency fund is instrumental in keeping you from racking up credit card debt if the unexpected occurs (e.g., job loss, leaky roof). To simplify creating an emergency fund, set up your online banking to automatically transfer money into a savings account each month. 

Retirement 

It may seem like retirement is a long way off, but it's important to put money away each month. Think about what you want your retirement to look like, and ensure you're putting enough money away to pay yourself. 

Evaluating your sources of retirement income is a good place to start. In Canada, there are several sources of income available for retirement. There's the Canadian Pension Plan (CPP/Quebec Pension Plan (QPP), Old Age Security, company-sponsored pension plans, Registered Retirement Savings Plans (RRSPs) and other sources such as rental properties and inheritance. 

Other things to consider include when you want to start using each income stream. Deciding how much to take from each income stream and when could affect how much you need to contribute to your retirement savings. 

3. Check your charitable giving and tax strategy

This year, be both kind and strategic by ensuring your charitable giving is tax-efficient. Maybe you give in-kind gifts to your favourite charities instead of dollars or donate when you sell property for a tax break. There are many ways to increase your impact and help the causes closest to your heart. Take some time at the beginning of the year to make sure you're making the most of what you give. 

4. Evaluate your will and estate plan

Reviewing your will and estate plan is a resolution that will bring you peace of mind — especially if you've experienced life changes such as a son or daughter getting married, a divorce or the birth of a child or grandchild. However, even if 2020 was relatively uneventful for you, by looking at your will and estate plan, you can be confident you're leaving a legacy rather than unnecessary taxes and headaches for your loved ones. 

5. Set up regular meetings with your advisor  

Speaking with your advisor regularly is key to your financial success. Even better: get a second opinion on your investments. We offer a virtual, no-obligation second opinion on your investments to make sure you’re maximizing the most effective investment strategies. Whether you're on the right path with your current advisor or need to make some adjustments, we'll help you move forward with confidence. 

Get expert advice on reaching your financial goals

With every new year comes the opportunity to approach what's ahead with a fresh perspective. Contact our Member Advice Centre or email us to connect with an advisor who can help you stick to your financial resolutions and choose investments to exceed all your goals.

Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Financial planning services are available only from advisors who hold financial planning accreditation from applicable regulatory authorities. Credential Securities is a registered mark owned by Aviso Wealth Inc.