Midnight of February 29, 2008 is the deadline for RRSP contributions for the tax year of 2007. RRSPs give Canadians a tax break, as well as letting your hard earned money grow tax-deferred. This differs from capital gains and interest accumulated on other investments, which are added to your taxable income for the year. As RRSPs are deducted from your taxable income, it effectively reduces the total amount that is subject to taxation. Waiting until retirement to cash in your RRSPs means that you are now in a lower income bracket, therefore you will pay less taxes, as your RRSPs are only taxable upon withdrawal.

RRSP is an acronym for Registered Retirement Savings Plan. It is not a specific financial product. It is rather a number of investments that are registered with the federal government specifically earmarked for your retirement. The Income Tax Act has a current list of eligible investments from which you can choose; the most popular is mutual funds, guaranteed investment certificates, accumulation annuities , segregated funds, and equities. However, you have a wide range of possible investments to choose from, depending on the financial risk you are willing to take. Some investment choices are quite volatile; they can make you a lot of money, but you must be prepared to take the risk of losing a lot of money. Others are more conservative; you may not make as much, but the risk factor is lower. Talk to your financial advisor about which types of RRSPs are best for your retirement savings plan.

Due to last year's federal budget, Canadians can now contribute to RRSPs until the end of the year in which they turn 71 as long as they are still earning income. This is a 2 year extension from the previous deadline. Once this deadline has been reached, 3 choices will be available:

1. Converted the RRSPs into a Registered Retirement Income Fund (RRIF) which is a tax-deferred retirement plan. Like RRSPs, the RRIF account is registered with the Canadian Revenue Agency. RRIFs are used to generate income from savings accumulated from the previous RRSPs. Once an RRSP has been converted into a RRIF, no further contributions can be made. RRIFs offer an annual minimum withdrawal which is cashed out and sent to the accountholder; this amount is tax free.
2. Purchasing an annuity. This is a good financial idea when interest rates are higher.
3. Cashing out. This is not recommended as taxes will have to be paid on the whole amount.

The 2007 tax year for the first time also offers senior couples the option to split their pension income. They can now allocate up to 50% of their eligible pension income to their spouse/common law partner. This includes company pension plan payments, RRIF payments as well as annuity income. For those who are still working and contributing to their RRSPs, it may be advantageous to contribute to a spousal RRSP if your spouse/partner has either no or little income for the year.

You can "over-contribute" by up to $2000 to your RRSP without being penalized. While you will not be eligible for the tax deduction, you will benefit as the earnings will be tax-free. Consider the option of borrowing money if you do not have the available funds to contribute the maximum amount; you may be able to make more money than you will spend on the interest for the loan. To calculate what your maximum allowable contributions are, use the calculator found at the Canadian Savings Bond website.

It's also important to decide who will be the beneficiary of your RRSP. By naming your spouse/common law partner, dependent child or grandchild, the proceeds upon your death may be tax-deferred even longer. Discuss this with your financial advisor in order to set up the most beneficial plan.

Most people assume that only those with wealth need a financial planner. However, everyone can benefit from professional financial advice, especially when it comes to retirement planning issues. Hiring or consulting with a financial planner can help Canadians avoid costly financial mistakes that can greatly affect their future.

A qualified financial planner will have a broad range of financial knowledge, including such issues as insurance, tax planning, investments and estate law. He or she will be able to help you coordinate your financial strategy with the other relevant parties, such as your estate lawyer, insurance broker, investment professional, etc. The financial planner you choose will be able to cover all aspects of your financial health, and make sure all these areas are sufficiently covered.

It's important to recognize that many provinces do not regulate the term financial planner. There is however a not-for-profit organization known as the Financial Planners Standards Council (FPSC) which sets the professional standards for the industry. The FPSC sets, enforces and promotes the highest competency and ethical standards in the financial planning industry. Planners who are recognized by the FPSC are denoted by the letters CFP, which stand for Certified Financial Planner. Financial planners who have this credential have passed a national examination for financial planning and are held to a strict professional ethic.

Whether you want to consult with a financial planner, or plan on hiring one, the following  tips will help you choose the planner who’s right for you:

• Have a basic idea of what you want. While your financial planner will help you come up with a concrete financial plan, have a general idea of what your goals are as well as thoughts regarding insurance, estate planning, investing, etc.
• Be prepared. Do your homework to familiarize yourself with various financial planning strategies as well as the terminology.
• Get referrals.  Ask your friends and/or colleagues who they use for their financial planning. You can also contact the FPSC for a referral to a professional financial planner.
• Ask to see qualifications.  A professional will have no problems disclosing their education status, what their degree is in, as well as if they are qualified as a Certified Financial Planner.
• Shop around. Plan on interviewing several financial planners. Ask such questions as how long they’ve been in business, whether their assistants will be handling your account, etc.
• Do a background check. You can contact their professional associations to see if complaints have been lodged against someone, and if so, what the outcome was.
• Ask for references. If the financial planner you plan on using has associations with other professionals i.e. insurance agents, investment counselors, etc., ask for their phone numbers so you can ask them questions.
• Know what to expect. Get a document in writing about the method of compensation, qualifications, etc. so you know exactly what the financial planner is offering, as well as the method of payment.
• Reassess the situation on a regular basis. If you are hiring a financial planner on a long-term basis, know what's going on. Schedule regular visits with your planner so he or she is aware of your changing needs, as well as time constrictions.

Once you have decided on which financial planner you will be using, whether for a consultation or a long-term relationship, you’ll need to do some thinking on your own about your finances. While your planner is there to give you valuable advice, you need to be knowledgeable about your financial status, as well as the areas you need the most help with. The areas that are most common in financial planning are:

• Budgeting: Regardless of income, everyone should have a household budget. Making and following a budget will let your financial planner know exactly how much money you will have every month to invest or save. This will help your planner to set up a plan that will best suit your needs. Your planner will also have suggestions about how much money you will need every month in order to reach both your short and long term financial goals.
• Saving and investing: In order to reach any sort of financial goals, this needs to be determined. You will have to decide on short term financial goals such as savings for a vacation, new cars, etc. You also need to decide on long term financial goals such as age of retirement, university education for your children, etc. A financial planner will be instrumental on helping you figure out the exact amounts, and the best investing plans for you in order to reach your goals. You and your planner will also have to decide what level of risk is going to be involved in your investment strategy.
• Insurance: Your planner will be able to look at what you currently have insurance for, and whether or not it is sufficient coverage. It's important that you have the right coverage so that your assets are protected, as well as coverage for if you can no longer work, etc. The proper amount of life insurance is also important should anything happen. Your financial planner can work in conjunction with your insurance broker to make sure that all your insurance needs are covered.
• Debt: Your goal should be to get out of debt, and your financial planner can help you devise a way to make that happen. Make sure you have all the information such as credit card balances, loan statements etc. in order to accurately calculate the total amount you owe.
• Taxes: This is an important part of your financial plan. Your planner will be able to help you with a strategy that can minimize your tax liability. Proper tax planning is essential to a successful financial plan.
• Estate: Your financial planner can help you make sure your plans are carried out as you wish. Depending on the size and intricacies of your will, your financial planner may also be one of your executors. You can also get advice on the taxation issues that will be applied to your estate.
• Retirement: In order to enjoy your retirement, you will need to have money saved. Letting your planner know at what age you want to retire, and the type of lifestyle you would like to have will enable him/her to set up the proper investment strategy for you.
• The whole financial picture: It's obvious that are many factors to consider when setting up a successful financial plan. This is where a planner is the most help; to put together all these components and give you the best advice in order to attain all your goals.

A financial planner, whether for a consultation or a long-term relationship, can be a great asset. Even if you don't have a complex financial situation, getting some help and clarity on your financial issues can make sure that you have the latest information and advice available. Your planner will be able to consider all the aspects involved and help you attain your goals. For more information on financial planning and choosing a qualified planner visit the Financial Planners Standards Council, you can also obtain a list of qualified professionals in Canada.

Although planning your will can be an unpleasant idea, it is the only way to protect your loved ones and ensure that your wishes are carried out. Choosing an executor is a very important component of planning your will. The executor (or executors) will be responsible for all the financial arrangements and notifications. It is important that who you choose is aware of what exactly is entailed with this job, and that everyone is comfortable with this decision.

So, who should you choose? You can choose more than one person. You may decide to choose a close friend or relative that you trust, as well as someone who is experienced in financial matters. This can be a wise choice if you have a complex estate that will require the time and effort of more than one person. However, make sure that the co-executors will be able to work together effectively. You can also opt for a family member or friend that you trust to work with a professional in the finance industry who will be paid a set fee for their service.

It is important to choose someone who has the time to devote to administering your estate. There are many responsibilities that your executor must take on, and be able to do during business hours. This includes such tasks as meeting with your lawyer, your insurance agent and/or financial advisor. For someone who works fulltime and/or has a lot of commitments, this may be an imposition to them.

The person(s) you choose should have a high probability of surviving you. It's a good idea to revisit this idea every few years; circumstances very often change. For instance, you may have chosen someone who 3 or 4 years later has serious health concerns, has started raising a family, etc. and can no longer devote the necessary time. If choosing a financial advisor/consultant as one of the co-executors, it is important that the specific person or business is still practicing and available.

The person(s) you choose must be aware of exactly what is entailed in being the executor(s).  Problems can arise if the person(s) you have chosen is not aware of the duties and responsibilities that are involved. Before accepting the role of executor, they must be willing and able to:

•    Obtain the death certificate and be able to participate in or fully arrange the funeral. If you have specific   requests about the service you would like, they need to be aware of these arrangements.

•    Find and review your will. This may entail meeting with a lawyer who can apply for probate.

•    Inform the beneficiaries that they have been included, as well as updating them on the progress of the probate. This can be a big job depending on the size of your estate and the number of people you have included in your will.

•    Notify all businesses and institutions of your passing. Banks, credit card companies, insurance companies, landlords, etc. must be notified as soon as possible. Items such as the phone company, internet, etc. must be notified and any pre-authorized payments stopped.

•    Apply for all life insurance benefits as well as any Canada Pension Plan death benefit if this is applicable.

•    Compile a list of the estate's assets. This is one of the most time consuming parts of being an executor. This list must include every bank account, investment, pension, registered plan, property and anything and everything else of value that you own. Each asset must be located, secured and valued. Detailed records must be kept of any transactions made on behalf of the estate for the courts and beneficiaries.

•    Paying the estate's debts, expenses, and taxes. All debts that are owed must be paid, including funeral expenses and the final tax return.

•    Administer any trusts set up in the will. The executor will be responsible for this task for as long as the trust is in existence.

•    Distribution of bequests, including any personal items (family heirlooms, etc) as well as property, stocks and bonds.

As you can see, the role of executor is complex and time consuming. Depending on the size and complexity of your estate, it can take months (sometimes years) before all issues are settled. If you choose a financial professional as executor or co-executor, they will specify the amount they need to get paid for their services. With friends and family members however, issues can arise revolving payment for their time. Specify an exact amount in your will that will sufficiently compensate them for their time and efforts. It is important to state the amount so there will not be any disagreements among the family and/or beneficiaries.

Once you have selected your executor(s), make sure that you have all your required documents together i.e. bank account numbers, insurance policies, deeds, and any other financial documents, as well as your current will. You also have to make it known where these documents are stored (lawyer’s office is usually advisable). Include in this a current list of all beneficiaries' addresses, phone numbers and email addresses. You can also compile a separate list of the information that will be needed such as:

•    The provincial location for your Canadian Pension Plan
•    Revenue Canada (for taxation information)
•    Your banking representative
•    Insurance broker
•    Service providers (phone company etc)
•    Charities that you have specified in your will

Remember that the more organized your will and documents are, the less stress will be incurred by your family and friends. Make people aware of your intentions to avoid confusion later on. Consult with a lawyer and/or financial advisor about your wishes, and the correct way to construct your will. Also consult with your life insurance representative to make sure that your coverage is sufficient to carry out your plans.

Each January brings with it the usual resolutions: more exercise, spending more time with family, etc. However, January is also a good time to look back at your finances and re-evaluate your financial strategy.

Re-evaluate your health and life insurance coverage. If you have successfully quit smoking/ and or lost a significant amount of weight, you may be eligible for cheaper rates. You  may want to apply for disability insurance so you’re protected in the event of illness or injury.

Review all your insurance policies. For instance, if you belong to AAA Auto Club, which includes a towing service, remove the towing service on your auto insurance. For those who have health insurance as well, you may not need the medical insurance that's included in the your auto insurance plan. By removing these unnecessary items, you can reduce your premiums. Know exactly what is covered in your health, life, and auto insurances so that you have the coverage you need, and aren't paying for unnecessary items. Consult with your insurance broker about any new insurance products that have become available and may be beneficial for you.

Review your spending and saving habits. Set a fixed amount that goes directly into a savings account every payday. If you need a debit card for this account, get one that allows you only deposit, not withdraw, to avoid impulse buying.

Pay your bills online. You save money on postage and checking costs, and have immediate access to your records and payment history. It's also more environmentally friendly!

Review your credit report annually and try to raise your credit score. Cancel any unused credit cards as well as limit the amount of credit lines that are in your name. Set up loans with automatic payments so you will not be penalized for late payments.

When interest rates are low, add to your mortgage payment to pay down your balance. See if your bank or credit union will allow you to convert your mortgage to biweekly payments that match your pay periods. This method gives you the opportunity to make one extra monthly payment each year, and pays down the principal and saves on interest. Be advised that some institutions may charge a fee to set this payment method up.

Start the new year off with a financial plan in place that realistically reflects your goals. Discuss your goals and other financial concerns with your insurance broker in to make sure that you have the correct coverage.

As the year 2007 nears the end, it's a good time to evaluate your business. Begin the new year with a detailed business plan in place, as well as defining your goals. Go beyond the profit and loss figures; maybe it's time to research using new suppliers, a new marketing strategy, etc.

Use the arrival of the new year as a time to step back and re-focus. By financially planning for your business, you give yourself an advantage. Being proactive rather than reactive can have positive results. You need to have a budget in place to ensure a positive cash flow. This needs to cover not only expenses such as payroll, but contingencies as well. Money will need to be set aside for taxes, capital expenditures, overhead, etc.

Look ahead to what you wish to accomplish in the coming year. You may wish to buy new computers, or upgrade your technology. This is also a good time to consider whether you need to hire more people to accomplish your new projections. If you don't already have it, group insurance can be a useful tool in attracting and retaining qualified personnel. It's also a wise decision to decide on changing your corporate identity. Changing your corporate identity may mean different liability and tax considerations; many of which are required to be done in the first few months of the year.

If you are partners in a small business, it can be beneficial that all partners have a term life insurance policy. These can be taken out, with the other partner named as beneficiary in order to insure the business. Agree on the amount and the length of term you wish to purchase; this will safeguard your business should something happen to one of the partners.