In 2022, your New Year's resolution should be to streamline your personal finances

This column is an opinion by Mark Ting, a partner with Foundation Wealth who helps clients reach their financial goals. He can be heard every Thursday at 4:50 p.m. on CBC radio as On the Coast's guide to personal finance. This column is part of CBC's Opinion section. For more information about this section, please read our FAQ.

At least once a year I recommend taking a financial inventory by determining your assets, liabilities, income streams and expenses. If something stands out, for example your monthly expenses consistently outpace your income, it should be addressed.

This is also true if it's the opposite situation where your income is outpacing your expenses. Resolution of the former should include budgeting goals, while the latter should concentrate on investment and/or tax planning.

If I had debt, I would want to know how much and whether the amount is trending higher or lower in comparison to past years. I'd also be looking at my annual RRSP and TFSA contribution room and coming up with a plan on how to fund them if appropriate.

"Streamlining" means being efficient and keeping things simple. Having multiple brokerages, banks and/or credit card accounts can overcomplicate your finances.

Many of us have multiple RRSPs and/or TFSAs at different institutions — all of which are being invested differently with varying risk profiles. If this sound familiar, consider consolidating your accounts to decrease the likelihood of errors, such as overcontributing to a TFSA. Errors such as this often occur when someone has multiple accounts, which can make contributions difficult to track.

The penalty is substantial for overcontributing to a TFSA, specifically one per cent a month, or up to 12 per cent a year for overcontributions.

In addition to a summary of your financial accounts, your inventory should also include the contact information of trusted advisors, passwords to access accounts, and an updated will.

This past year I spoke with several people who had dealt with, or who are currently dealing with, the death or deteriorating mental capacity of their spouse. Couples that had planned ahead, streamlined their finances and safely kept the family's financial inventory easily assessable to both spouses were very thankful they had been proactive.

Major life events such as marriage, divorce, illness, death of a loved one, birth of a child, job loss, and promotions often trigger new financial needs or actions. For example, due to a life event, you may need to update the beneficiary designation on a life insurance policy, RRSP or TFSA.

Another often-overlooked task is preparing or updating a will and Power of Attorney (POA). Most adult Canadians do not have a will, which I would suggest should be a priority, particularly if you have dependents.

Cost is often cited as a reason for not having a will and POA. These documents, prepared by an estate lawyer for two people, can cost several thousand dollars depending on the complexity of an estate, but in many cases, it is a price worth paying.

Anyone with a large estate, who has re-married, has children from a previous marriage, or a family business, should consider getting their will prepared by an estate planning professional. Otherwise, you risk your heirs fighting over your estate which can cost significantly more, financially and emotionally, than the price you would have paid for a properly drawn up will.

If your estate needs are straightforward, consider an online will provider where packages that include a will, POA and representative agreement run around $100.