he first month of the year is a good time to start planning your finances and taking charge of your money. Waiting till the end of the year before implementing your savings and investing plans means that you have allowed 12 months to go by without utilizing compound interest to your advantage.

Financial Steps To Take in 2019

As you move to implement your New Year’s resolutions, this financial checklist will help you focus on some of the key financial steps you need to take.

1. Contribute to your TFSA

The Tax-Free Savings Account (TFSA) is one of the best vehicles we have in Canada for saving money. 

For 2019, the TFSA contribution room is $6,000, an increase of $500 from last year. If you have been eligible to contribute to a TFSA since it was introduced in 2009, your total contribution room is now $63,500.

A TFSA account is very flexible and can hold a variety of investments. You can use it to save for anything – wedding, home down payment, vacation, emergency fund, etc. You can withdraw your funds whenever you want and re-contribute the amount you withdrew in a future year.

No taxes are due on earnings generated by your account unless you run afoul of the rules put in place by the government.

The sooner you start contributing to your TFSA, the faster it will grow.

2. Contribute To Your RRSP

RRSP contributions are tax-deductible and will save you on taxes today while allowing you to grow your retirement pot. 

For 2019, your RRSP contribution limit is 18% of your earned income, up to a maximum amount of $26,500. If you have not yet maxed out your contributions for the 2018 tax year, you can still do so up until the end of the RRSP season, which is March 1, 2019.

Contributions made until the deadline can be used to claim a tax deduction for the 2018 or 2019 tax years. It can also be carried forward to future years.

If you are turning 71 in 2019, you can make your last RRSP contribution before December 31, 2019. By next year, you will be required to close your RRSP and do one or a combination of the following: withdraw cash, convert to an RRIF, or purchase an annuity.

Your RRSP is not only for retirement. You can also withdraw funds tax-free to buy a house or go back to school.

Related: Don’t Play Around With Group RRSPs

3. Contribute To An RESP

College tuition keeps rising and a registered and a Registered Education Savings Plan (RESP) is one way to provide your kids with an opportunity to obtain post-secondary education without the debt.

Contributions you make to your kid’s RESP qualify for matching government grants at 20 cents for every $1 of contribution, up to $500 in grant money per year (i.e. grant on $2,500 in annual contributions).

You can put up to a lifetime maximum of $50,000 per child in an RESP account that qualifies for a maximum Canada Education Savings Grant of $7,200. Low-income families may qualify for additional grant money (a-CESG and Canada Learning Bond).

It is advisable to start contributing to an RESP early so that compound interest can grow the account over time. Funds in an RESP grow tax-free.