Welcome to January
Welcome to 2025! If you had a rough 2024 then it’s time for a reset and if you had a great 2024 it’s time for renewal – either way we can expect a great 2025. The wonderful thing about January is that it brings a new beginning. New hopes, new ideas, new outlooks and new years resolutions. Did you make any new year’s resolutions this year? In the past I have used new year’s resolutions to add good habits to my life. Whether you made new years resolutions or not, it is a great time to review, evaluate and recommit to a new plan.
Get your one page 2025 Financial Plan Checklist here.
Here is a 2025 Financial Calendar:
January: Create a monthly budget and top up your TFSA
Kick the year off by taking an afternoon to sit down and create a realistic monthly budget. Start by reviewing your cash flow, debt and investments. You can't plan where you're going if you don't know where you're starting from. This is also a good time to plan to start setting money aside each month for future vacations or other special occasions.
List essential expenses first, followed by savings and debt repayments, and discretionary spending last, consider using a budgeting app or spreadsheet to track progress, and break down annual goals into smaller monthly targets.
Just remember that creating a monthly budget isn’t typically a one-and-done task. For the first two or three months at least, plan to review how well you did with sticking to the budget and make any necessary adjustments.
Top up your TFSA. This year’s amount is $7,000.00
February: Contribute to your RRSP
If you’re still thinking about making an RRSP contribution for 2024, February is the time to get it done; the deadline is March 3, 2025. Contributing to your RRSP before the deadline can lower your taxable income for the 2024 tax year, This may result in a refund or a reduced tax bill. Plus, you’re enhancing your long-term retirement savings — money that grows tax-deferred, giving it more time to compound. Even if retirement feels far off, building this habit early pays off significantly down the road. Check your annual notice of assessment to find your RRSP contribution limit.
March: Prepare for tax season
Don't wait until right before the April 30 deadline to start getting your 2024 taxes organized,. Leaving taxes to the last-minute means people often miss important details, including potential tax credits. They may not find all the medical receipts or charitable donations because they're trying to finish it in 24 hours.
Collect T4s, T5s, RRSP and FHSA receipts, charitable donation slips, and any other relevant documents in a designated folder, whether physical or digital.
Consider using tax software to guide you through the filing process, or if you’re feeling uncertain, seeking professional advice. Even a short consultation with a tax professional can help you avoid costly mistakes and ensure you’re taking advantage of all available credits and deduction.
April: File self-employed taxes early
While self-employed Canadians have a slightly extended filing deadline of June 16, any taxes owing still have to be paid by April 30. It’s a good idea to file your return and pay as early as possible to avoid interest charges. Consider using accounting software to stay organized and make sure you understand which expenses are deductible for your specific type of business.
People who are new to self-employment can be caught off guard when it comes to paying taxes because GST/HST may not be remitted to the CRA the way it is with a salaried pay cheque. Try to estimate how much you will earn for 2025 and plug that into a tax calculator. Then you can plan to set money aside throughout the year to cover it by updating your monthly budget.
May: Review insurance policies
Set aside some time to assess your insurance policies, including life, disability, home and auto coverage. Premiums and coverage needs can shift over time, so a yearly checkup ensures you’re adequately protected.
Reviewing your coverage can help ensure you're not overpaying for unnecessary features — or if you’re underinsured in important areas. This is also when you can compare premiums across providers to see if you could save by switching. Don’t forget to confirm that any beneficiaries on life insurance policies are up to date and that coverage limits align with your assets and liabilities.
June: Plan for summertime expenses
As school wraps up, now is a good time to get your summer finances in order. Summer often brings extra expenses, such as child care, day camps, weddings or vacations, and those costs can sneak up on you if you’re not prepared. Take a moment to review your plans and create a budget for those expenses. List everything — from camp fees and travel costs to wedding gifts and activities — and account for them in your planning. Adjusting your monthly budget for the summer months can help you stay in control and avoid overspending so that you can kick back and relax more.
July: Boost your financial literacy
Take advantage of the positive mindset that comes with warm weather. Summer is a time of growth, which makes it a great time to increase your financial knowledge. If you’re curious about investing or want to know more about saving for retirement, this is a great time to read a book or take a course to expand your knowledge.
The Wealthy Barber is a classic if you haven’t read it. There are a lot of financial influencers who provide tactics and strategies on social media.
You can also access free online personal finance courses through the Canadian government.
August: Look into investments
As the summer winds down, take some time to review your investments to ensure they’re still aligned with your goals.
If you haven’t started investing, look for ways to start small. For example, see if your employer offers any programs or plans that match RRSP contributions or other sponsored incentives. Next, look into setting up a TFSA or RRSP. If you're new at it, investing can feel overwhelming. Drake can help you with this, and then as you start educating yourself, you can set aside extra money and open up a self-directed account.
September: Save for school
September feels like a mini-January, with kids going back to school and more responsibilities returning. That’s probably why financial planners get inundated with financial meetings during the fall. Take advantage of that administrative back-to-school energy.
This time of year serves as a reminder to revisit education savings plans (RESPs) if you have children. “Contributing (to RESPs) now can help you benefit from government grants and keep you on track for future education costs.
October: Establish a nest egg
If you haven’t already, start setting up an emergency fund. We recommend storing away about six months of household income, but something is better than nothing. This is especially important for those who work in volatile industries where you feel like your job may not be secure. If your profession is very niche, it may take time for you to find another job, so you may want to have six to twelve months of income saved up. If you tap into those funds for any reason, don't forget to replenish them.
November: Plan for holiday spending
Create a holiday budget now to avoid overspending when the holiday madness hits toward the end of the year. I've noticed that people who have the most amount of debt in January are people who didn't start planning until the last minute. Last-minute choices often lead to regret later.
Bonus tip: November is also the best time for year-end tax planning. Considering tax-loss selling (a strategy used in non-registered investment accounts to reduce taxable income by selling investments that have decreased in value) where it makes sense, and making sure you’ve maximized tax-advantaged accounts.
December: Donate to worthy causes
If you want to celebrate the season of giving with a charitable donation, doing so by Dec. 31 can get you a tax credit for 2025.
The first $200 in donations to Canadian charitable organizations typically mean a 15 per cent credit at the federal level and 29 per cent for more than that. You can also get provincial tax credits for donating $200 or more that range between four and 25 per cent.
I will be meeting with many of you in the next month to assist you in your 2025 plans. Be sure to talk to us about topping up your TFSA and maximizing your RSP if you are a higher income earner. To learn more about the difference between and RSP and TFSA review my February 2024 newsletter: https://www.drakefinancial.com/blog/welcome-to-february
JANUARY QUIZ
Here is a fun little quiz to start the new year. I got 7 out of 10. Let me know if you do better!
TAKE THE QUIZ: A glimpse into the future - The Abbotsford News
Financial Literacy Segment
We all know that doing the maximum TFSA contribution and RSP contribution if you have employment income, is something we should all do. But what if we just don’t have the cash in hand? Did you know that we can transfer your financial assets, including MIC shares or DMI (mortgages) that you own in your personal name into your TFSA or RSP plan? And if you contribute to your RSP in cash or in kind on or before February 28th, you can get a 2024 tax receipt, file your tax return and get a nice tax refund in a matter of weeks. Ask me how this might work for you.