Fall has arrived! The leaves start to drop and the kids are back in school (mixed reactions about that, if you dread making daily lunches like I do!). As you prepare to clean the yard and bid farewell to your favourite summer wear, it’s also the perfect time for your Fall Finance Cleanup!
And I promise – no raking of leaves required.
Every September and October, my calendar is packed as I meet with all my physician clients to see what we should clean up financially before the end of the year. Often this process includes meeting with my clients’ accountants as well. (Hey, I’m always up for a coffee meeting!)
Last week, I had coffee with Luke’s accountant. (And Luke didn’t even have to be there – only if he wanted to.)
“Luke’s income is high this year. That’s great, but he’s going to pay some corporate tax at the higher rate now. What are your thoughts on Luke paying himself a higher salary and maximizing his RSP?” his accountant, Sherry, asked.
I love this kind of meeting, where my client’s financial team works together on their behalf.
“The extra salary would really just go to his RSP, so no worries there. But Luke’s corporate investments have also done well this year, and he’s had a little over $40,000 of income generated. What would you suggest – should he pay it out to himself as well through his corp?” I asked.
“Since half of that would sit with the government if he doesn’t, we should likely add that into his compensation also,” she replied. “But that would put him into pretty high tax brackets, so let’s take a look and see if some of it should be a shareholder loan…”
I love this kind of meeting, where my client’s financial team works together on their behalf.
This back and forth between two numbers nerds (who love what we do) went on for about another half hour. When we were done? Our plan of attack put Luke’s best financial foot forward….and his tax rate low.
I always feel like I need to high-five the accountant!
So, you think that’s it? Your Fall Financial Cleanup is done?
Nope.
It’s not just income tax that should be assessed and planned.
Here are 4 Fall Finance Cleanup items to consider:
1.Debt. Have you taken on more debt, or are you looking to pay off what you already have? Now is a great time to assess the best methods to manage your taxes. And I’ll see if you can take out more income to really control the debt load.
2. Fees. Can you bring down your investment fees? One new client had been overpaying by $11,000 per year, none of it deductible! (I know. You should have seen the lock of shock on his face when I told him. And then the look of relief when I fixed it.)
3. Rate of savings. Has your rate of savings kept up with your increase in income?
4. Protection. Has there been a change in your lifestyle that should cause you to update (or get!) your wills? Whether you have an expanding family or a growing business, a will is something everyone should have. This is also a great time to see if your insurance matches up with your current needs.
These and other Fall Financial Cleanup items give you a running head start into 2025! And the relief knowing you have a secure road plan is one of the many gifts you get from a Fall Financial Cleanup.
But as for raking the leaves and making school lunches? That’s on you! LOL.
Enjoyed this article? I’d love to hear from you! I’m always interested in hearing about the unique financial situations doctors have. Send me a note!
