My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Monday, December 21, 2015

Year-End Financial Clean-up - 2015 Version

In 2016, 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 trying to watch 2016 IIHF World Junior Championship games from Finland, consider undertaking a financial cleanup.

So what is a financial cleanup? In the Blunt Bean Counter’s household it entails the following (Note: For full disclosure, this post is just an update of my 2015 year-end Financial Clean-up).

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 a summary of 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; although this year, this may be a very gloomy exercise, especially if your portfolio is Canadian based. I like to compare my returns to some large 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 requires).

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 seemingly written a hundred 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 2015 and I wish you and your family a Merry Christmas and/or Happy Holidays and a Happy New Year. See you in January.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

6 comments:

  1. Happy Holidays to you and family Mark! Best wishes for 2016 and stay in touch.
    Mark

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  2. Due to my lack of diligence in my Quicken accounting work, my year end reconciliation was a helacious 2.5 hour marathon of figuring out that I had badly categorized:
    1) Gas purchases
    2) Child Tax Credit Income
    3) Left many transactions with NO category

    Dear Lord, it was a torturous time, but I think I have it straight now. Now I am just depressed at the correct results

    ReplyDelete
    Replies
    1. Hey BCM

      First of all nice profile in Globe, lucky you moved your pension plan. I may need to change the name of this post going forward to year end clean-up and resulting depression. My wife hates when I do this, since I am always in a bad mood after. Happy Holidays and Happy New Year to u and ur family

      Delete
  3. Definitely saved this article. Have a prosperous New Year! :)

    ReplyDelete