Financial Checklist to Start the Year (2018)

This is a checklist that I update and follow at the beginning of every year.

Similar to the end of the year tax tips, there are certain financial to-do items to start off the year on a strong note.  Here is the checklist that I use at the beginning of the year.

1. Contribute to your TFSA

For 2018, TFSA’s get $5,500 in contribution room ($57,500 total since 2009).  If you made a withdrawal in 2017, then this year, you can contribute up to $5,500 plus the 2017 withdrawal amount.  For more details about your TFSA contribution room, here are the details.

2. Maximize your RESP contribution

For those of you with kids, a new year means more government matching for your RESP!  The federal government will match 20% of your RESP contribution which maxes out at $500 per child per year.  To max out the government contribution, you’ll need to contribute $2,500 per child to the RESP account (how does an RESP work?).

Haven’t opened an account yet?  We have ours with TD e-series, but if we had a child today, I would likely open it with a brokerage that offers commission-free ETFs.  Also, don’t worry if you haven’t started contributing yet, you can still catch up on your RESP contributions!

3. Contribute to your RRSP

Another contribution?! I know, by the end of January, our savings stockpile definitely takes a hit – but it’s worth it!  Even though it’s no longer 2017, you can still contribute to your RRSP (or not) to your tax advantage.  The RRSP contribution will act as a deduction, so if you have tax owing (ie. from capital gains or side business etc), or in a high tax bracket, it may make sense to make a contribution.  RRSP contributions made between now and the RRSP deadline (March 1. 2018) can be claimed for either 2017 or 2018 tax year (or carried forward).

4.  Re-balance your Portfolio

If you have significant capital gains in a non-registered portfolio that requires re-balancing, then early in the year is the best time to do it.  Why?  Simply because capital gains tax is deferred for over a year – that is when you file 2018 taxes in late winter 2019.  Also, now is a good a time as any to re-balance some of those holdings.

5.  Calculate your Annual Returns

Calculating your annual investment returns is important to see how effective your portfolio is against the index benchmark.  This is really geared towards more active investors or those that rely on their bankers to choose active mutual funds for them.  Some discount brokerages do the calculations for you, but I’m the type that likes to confirm with my own calculations.  So if your broker doesn’t do the investment return calculations for you, or if you want to do them yourself, I recommend that you get familiar with the XIRR function in Excel (or google spreadsheets).

Sounds complex, but it really isn’t too bad for those who have used a spreadsheet before.  Here is a thorough explanation of how to use XIRR to calculate your investment returns.

6. Prepare for filing 2017 Taxes

With 2017 over, it’s a good time to start thinking about income tax.  There is a bit of administrative work required for income tax filing, even before obtaining your T4 from your employer.  Some things that I like to get out of the way are:

  • Print off my non-registered brokerage statements for the year (and calculate capital gain/loss for the year – if you have multiple buys/sells with the same position here’s how to calculate your adjusted cost base);
  • Gather receipts for RRSP contributions, childcare, children fitness programs , arts programs, charitable donations, prescription drugs, dentist visits; and,
  • Print off interest statements from my investment loan.

For more information, here is a comprehensive article about the information required to file income taxes.  If you are a small business owner or own rental properties, here is an article that may help.

Those are my checklist items to start the year.  What tips do you have?

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FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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tabar
3 years ago

when starting with ETF portfolio for the very first time, how much one should plan to set the size of portfolio at? For example $10000, $25000?

Dividend Earner
3 years ago

Excellent list. For the rate of return, I recommend you evaluate it since the start of your portfolio rather than just the last 12 months.

GYM
3 years ago

Great list and reminders! Happy 2018! I have already done the TFSA and the RESP contribution, I almost forgot about the TFSA until a few days ago. We are with TD e-series as well for the RESP.

Leo Ly @ isaved5K.com
3 years ago

Since we are talking about income tax, we should also gather our public transportation cost for up until July of 2017. This year will be the last year we are able to claim the public transportation cost.

If you had made donations during the year, collecting those receipts to organize for your tax filing will help too.

Molly Day
5 years ago

I think is so important to start fresh and very organized financially for the new year. I know next year I will be using this as a checklist to make sure I have everything in the right place at the right time. Thank you for the post!

Bobby
5 years ago

Hi FT I was hoping you could help out with RESPs with the TD eseries funds, I was hoping you could explain how you rebalance every year if you make one lump sum contribution each year? Thank you.

Jess @ Best Credit Cards Canada
5 years ago

I would also add that it’s time to create savings goals and a fresh budget for 2016. This is one of my favourite activities, I am a bit of a nerd with this.
We have just opened our RESP for our baby and we went with a low cost brokerage account. We are due with our second baby in the early spring so will be doubling up!

Sha
5 years ago

2016 started with down markets, if this trend continues, would it be wise to offload existing equities and buy when there is an evident trough? What about the tax implications on the capital gains?

Peter
5 years ago

How about plan now to avoid a large income refund when you file your 2016 taxes. you can apply for a reduction of tax at source by using the form T1213. Getting a large refund sounds good but in reality you are hurting yourself. you are giving the government an interest free loan for 12 months.

Levon
5 years ago

A new year is always an excellent time to start things fresh – especially financial things. It’s usually the case that if you can do January right financially, your entire year will go well financially.