End of Year Budgeting

calculator and note pad

Andrew Pyle, Senior Wealth Advisor and Portfolio Manager

Pretty soon the chilly winds off the lake will give rise to shorelines covered in a dusting of snow and for those who make their cottage their home; this can be a beautiful time of the year.  It is also a time when we start to think about those other expenses at year-end, namely the holiday season and the spending that goes along with it.

For many Canadians there is an anxiety that accompanies this season, not only because of  the planning that needs to be done but the financial impact that is felt when the credit card bills start rolling in like an icy blast in January. It is particularly worrying given that it is in January and February that working Canadians look for the funds necessary to top up their RRSPs. One proven way to counter this anxiety is to start planning for year-end right now. 

Holiday season entertaining, travel and gift giving should be viewed no differently than any other special project done around the home.  Figure out what you are willing to spend on these items and begin putting money aside.  Having a plan will also steer you away from last-minute binge spending and it will also give you the added time to look for better deals. Once you have a budget, try sticking to it and for those like me who inevitably hunt for a parking space in the mall parking lot the day before Christmas Eve, aim to complete your shopping weeks before the big day.

At the same time, you can also start to give some thought to your saving plan. For those that leave their RRSP contributions until the last minute, try putting your money away earlier before the January bills show up. This is what we call ‘paying yourself first’ and it can be done either in a lump sum approach before year-end, or by putting in set amounts each month during the year.  This not only relieves the stress associated with finding cash before the RRSP deadline, but it is smart investing. The reason is that your investments inside the RRSP are earning income and growing tax free, while money invested outside is not. And putting money away sooner means less money available in the bank that might go towards binge spending at year-end.

Andrew Pyle Senior Wealth Advisor and Portfolio Manager ScotiaMcleod(s) is a division of Scotia Captial Inc. This article is intended as a general source of information and should not be considered as personal investment advice.

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