The top 5 things that should be on your ‘beginning of the year financial to-do’ list
It’s a new year—and while you’re sorting out whether or not ‘old acquaintance should be forgot’; there is a list of things you shouldn’t forget if you want to start the year on the right financial foot.
#1: Top up your TFSA
For 2024, the annual Tax-Free Savings Account contribution limit has increased to $7,00 (from $6,500).
That means if you have been eligible to contribute to a TFSA since its inception in 2009, as of January 1st of this year, you will have a total contribution room of $95,000.
For those of you that made a withdrawal from your TFSA in 2023, you can re-contribute the amount you withdrew last year in addition to your 2024 contribution.
For example, if you withdrew $2,500 from your TFSA in 2023, you can contribute up to $9,500 to your TFSA in 2024 (i.e., $2,500 for 2023 withdrawals + $7,000 2024 limit = $9,500).
Learn more about how to avoid the TFSA over-contribution confusion.
#2: Maximize your RESP contributions
When it comes to the Registered Education Savings Plan (RESP), the turn of the calendar year means the benefit of cashing in on another 20% in matching government contributions in the form of the Canada Education Savings Grant (CESG).
That’s where the federal government will match your RESP contribution up to a maximum of $500 per child, per year. Naturally the earlier in the year you make that contribution, the more your child will benefit from the earning potential of compound interest.
Here’s why you should be contributing to an RESP (and what it’s costing your kids if you’re not).
#3: Get ahead of RRSP deadline
You can make RRSP contributions for the 2023 tax year up until February 29, 2024. However, you may want to get those contributions in sooner rather than later—considering how hectic life as an education member can be.
Which brings us to some educator-specific RRSP advice.
While the unused RRSP contribution allowed for the 2023 tax year is $30,780, keep in mind that may not be the maximum for you. Your individual maximum contribution will also reflect any pension adjustments and carry-forward of unused deduction limits from previous years.
#4: Start preparing your 2023 tax return now
We’re already halfway through the school year—before you know it, tax time will be here. Since you may have a little bit of administrative work to do when it comes to income tax filing (even before obtaining your T4 from your school board), it’s always a good idea to get organized early.
A few tax-preparing details you can start taking care of:
- Gather receipts for eligible school supplies (in order to take advantage of the Eligible Educator School Supply Tax Credit)
- Print off interest statements from any investments
- Take advantage of all income-splitting/pension-sharing opportunities
- Don’t forget to also gather receipts/information for other eligible credits such as childcare, charitable donations, and the First-Time Homebuyer’s Tax Credit
#5: Schedule a financial review
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 (since capital gains tax is deferred for over a year). The start of a new year is always a good time to speak with your financial advisor to review whether or not you need to re-balance some of your holdings due to market fluctuations.
Of course, don’t schedule just any financial review. Schedule an educator-specific financial review.
From pay grids to pension plans, Educators Financial Group understands how your pay structure works during your working years and in retirement. This means we can provide you with the kind of financial advice that makes the most sense every step of the way—both during and after your education career.
