Year-end Financial Cleanup

In 2015, would you like to improve your money management, minimize taxes and ensure your loved ones have a financial road map?

Then this holiday season, in between your family gatherings and watching the 2015 IIHF World Junior Championships consider undertaking a financial cleanup.

So what is a financial cleanup? In the Blunt Bean Counter’s household it entails the following:

Yearly Spending Summary

I use Quicken to reconcile my bank and track my spending during the year. If I am not too hazy on New Year’s Day, I print out my spending by category for the year. This exercise usually provides some eye opening and sometimes depressing data, and often is the catalyst for me to dip back into the spiked eggnog!

But seriously, the information is invaluable. It provides the basis for yearly budgeting, income tax information (see below), and amongst other uses provides a starting point for determining your cash requirements in retirement.

Portfolio Review

The holidays or early in the New Year is a great time to review your investment portfolio and annual rates of return. I like to compare my returns to standard indexes and to the yearly returns on the Canadian Couch Potato’s low cost ETF model portfolios. The Couch Potato typically provides the data for the prior year’s returns on his model portfolio’s in the first week or two of January. I also have the advantage of reviewing my returns to those of the various investment managers my clients engage.

January is also a great time to review your asset allocation, and to re-balance to your desired allocation and risk tolerance.

Tax Items

As noted above, I use my yearly Quicken report for tax purposes. I print out the details of donations and medical receipts (acts as checklist of the receipts I should have or will receive) and summaries of expenses that may be deductible for tax purposes such as auto expenses. If you use your home office for business or employment purposes (remember you need a T2200 from your employer), you should print out a summary of your home related expenses.

Where you claim auto expenses, you should get in the habit of checking your odometer reading on the first day of January each year. This allows you to quantify how many kilometres you drive in any given year, which is often helpful in determining the percentage of employment or business use of your car (since, if you are like most people, you probably do not keep a detailed log as the CRA would prefer).

Medical/Dental Insurance Claims

As I have a health insurance plan at work, I also start to assemble the receipts for my final insurance claim for the calendar year. I find if I don’t deal with this early in the year, I tend to get busy and forget about it.

To facilitate the claim, I ask certain health providers to issue yearly payment summaries. This ensures I have not missed any receipts and also assists in claiming my medical expenses on my income tax return. You can do this for physiotherapy, massage, chiropractors, orthodontists, and even some drug stores provide yearly prescription summaries.

Stress-Test Checklist

If you are a regular reader, you know I have written numerous times about stress-testing your finances and writing your financial story ( in case you pass away). The holidays or early January is a great time to update your financial story or checklist for any changes that occurred in the prior year. Such things as new brokerage accounts, online passwords, changes in insurance, etc. need to be updated. If you have not yet got around to stress-testing your finances and writing your financial story, there is no better time to start than early in the year.

Speaking of the year-end, this is my last post for 2014 and I wish you and your family a Merry Christmas and/or Happy Holidays and a Happy New Year. See you in January.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.