Tax Tip Thursday

New Year Financial Planning – Week 2: Know Your Numbers

There are a number of things that you can do at the beginning of the year to improve your finances and/or get things in order for the 2025 year.

So here is week 2 of 2  checklists for your finances as the new year begins:

  1. While this is not a financial  task, it is something that you should do on an annual basis.  Review your will and check if there have been any changes to you or your personal situation that make your will no longer suitable. Important things like a marriage, divorce, new child, and new property are some of the reasons you should review your will. If you do not already have a will, book an appointment with a lawyer to discuss creating one and a power of attorney while you are at it.
  2. Make sure you know your personal RRSP limit.  The very maximum amount you may contribute for 2025 is $32,490.  You can get this from your MYCRA account.  Do NOT overcontribute!  Penalties are 1% per month of the over contribution and it is a slow and painful exercise to fix it.
  3. Make sure you know your personal TFSA limit.  I know a lot of people contribute at the beginning of the year for their TFSA.  Please ensure you know your limit, so that you do not overcontribute.  The penalties are 1% per month.  The new limit for 2025 is $7,000 and if you have never contributed, $102,000.  While the RRSP limit is on your MYCRA account, the TFSA amounts may not be updated until April, so be warry.
  4. If you do have a TFSA, check how your money in there is invested. It’s great that you have contributed the money, but don’t make the mistake of just letting it sit in cash or in a low interest investment. You can invest that money in the same way that you can in your RRSP or pretty much any other investment vehicle.  In the TFSA you can own stocks, exchange traded funds (ETFs), mutual funds, bonds, and Guaranteed Income Certificates (GICs), to name a few.  US or other international currencies are NOT recommended to be held in your TFSA.
  5. If you are saving for a new house using the First time Homebuyers Saving Account (FHSA), start your monthly contributions so you can take advantage of the deductions!  Annual limit $8,000 and the maximum is $40,000.

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Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.