7 Tips - Gord Lemon7 tips to help you measure your financial goals

As the end of the year is fast approaching, it can be an opportunity to reflect on the year that has been and whether you are on track of meeting your financial goals you made in January…you did make a financial goal list is January, right?

You also probably made some New Year’s resolutions last year related to your health or other areas of your life and if you didn’t make any financial goals for yourself last year, start thinking about what they will be come January and put them into action!

Obviously creating financial goals can be done anytime throughout the year so if you are reading this…today is the day you need to make financial goals for yourself.

Here are 7 tips to help you achieve this year’s financial goals.

  1. Know where your starting point is

Before you can put a plan in place, you need to understand your current expenses, savings, debt, etc. You need to know exactly how much is coming in…how much is going out… and how much is left over. It important to take the time to create cash management statements or a net worth statement so you have a starting point.

It is also important to include your spouse or significant other in this process. Sometimes people don’t talk with their significant other about financial matters. It is important that you both have an understanding of the family finances and be able to set goals as a couple. Either of you should be able to step in and be knowledgeable about everything from the monthly budget to insurance and investments.

  1. To begin saving/investing, create a monthly spending plan

You need to understand where your money goes every month. Do you know if you are financially ahead each month after expenses? If your answer is ‘no’ to either of these questions (or I don’t know!), you need to create a spending plan to keep track. This will allow you to know where you need to curtail unnecessary spending and/or identify surplus cash to create an investment account.

  1. Know your credit history

Having and maintaining a good credit history is one of the most important steps you can take as an investor. If you want to borrow cash, this is huge. You must take every step to reduce credit card and other high interest debt. Ask yourself the following:

  • Do you have at least 2 credit cards solely in your name? Lenders require at least 2 “trade lines” with a minimum 2 year history
  • Do you use credit wisely?You must pay off your balances monthly or at least keep your monthly balance at less than 50% of your limit.
  • Is your credit report accurate? Waiting until you for a mortgage or other credit is not the time to find out what your credit report shows. It is also not uncommon to find out your credit report is inaccurate. It is good practice is to request a copy of your credit report at least annually. In Canada, you can get a free report mailed to you or purchase your report online at www.transunion.ca or www.equifax.ca.
  1. Set clear financial goals

There are three factors you want to consider when thinking about your goals:

  1. Your priorities (values and beliefs);
  2. Your responsibilities (items that may be part of your monthly cash flow)
  3. Your dreams (vision and aspirations).

You should go through the process of setting and prioritizing your goals by utilizing all three factors. It is also important that your goals be specific, measurable, attainable, realistic and time sensitive (SMART).

  1. Organize your record keeping

Don’t wait until a financial audit or any other crisis to organize your financial documents and other important papers. It is critical for you (and significant other) to be able to locate documents in the event of a disaster or death.
You should be able to answer these questions:

  • Do you have all the records you should?
  • Are those records properly organized (if not…as much of a pain as it is, it will be worth it)
  • Do you have a system to keep the records organized? (Creating a filing system is not difficult)
  • Where do you keep the records and for how long? (There is a checklist at the bottom of this article)
  1. Have a strategy

Based on your goals and priorities, choose strategies which will help you create a diversified portfolio. By that I mean utilizing vehicles which will create multiple streams of income…preferably, vehicles which you have control of as opposed to money market funds, where you have no control.

If you are unclear how to do this, have a financial mentor to assist in your goals. Choose someone who is impartial and won’t make money on your decisions. To say this another way, if you are getting advice from someone who can profit directly from investing your money, how can they be impartial?

  1. Protect your assets

Warren Buffet said (and I’m paraphrasing)  ‘above all, protect your capital.’ If you don’t have a strategy for your estate, the government will. Some key actions you should take are having a will and updating it regularly. This means:
a) Preparing estate planning documents;
b) Reviewing and updating beneficiary designations
c) Making sure all your investments are titled appropriately

Another aspect of protecting your assets is to review your financials every year. This will serve to keep your finances organized and help keep your financial goals on track or allow you to update your goals as your achieve them.


Type of record Length of time to keep, and why:

Canceled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions)

Records for tax deductions taken

Seven years

  • The CRA or IRS has three years from your filing date to audit your return if it suspects good-faith errors.
  • The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund.
  • The CRA or IRS has six years to challenge your return if it thinks you under reported your gross income by 25 percent or more.
  • There is no time limit if you failed to file your return or filed a fraudulent return.
RRSP, IRA contribution records Permanently
If you made a non-deductible contribution to an RRSP or IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.
Retirement/savings plan statements From one year to permanently

  • Keep the quarterly statements from any registered plans until you receive the annual summary; if everything matches up, then shred the quarterlies.
  • Keep the annual summaries until you retire or close the account.
Bank records From one year to permanently

  • Go through your cheques (checks) each year and keep those related to your taxes, business expenses, home improvements and mortgage payments.
  • Shred those that have no long-term importance.
Brokerage statements Until you sell the securities
You need the purchase or sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time.
Bills From one year to permanently

  • Go through your bills once a year.
  • In most cases, when the cancelled cheque from a paid bill has been returned, you can shred the bill.
  • However, bills for big purchases — such as jewellery, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept in an insurance file for proof of their value in the event of loss or damage.
 Credit card receipts and statements  From 45 days to seven years

  • Keep your original receipts until you get your monthly statement; shred the receipts if the two match up.
  • Keep the statements for seven years if tax-related expenses are documented.
Paycheck stubs One year

  • When you receive your annual T-4 or W-2 form from your employer, make sure the information on your stubs matches.
  • If it does, shred the stubs.
House/condominium records From six years to permanently

  • Keep all records documenting the purchase price and the cost of all permanent improvements — such as remodeling, additions and installations.
  • Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home.
  • Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a greater profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax


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