When To Do a Financial Review (And What to Look For)

This post was sponsored by the Canada Deposit Insurance Corporation, but all opinions and stories are my own.

How do you know if it’s time to do a full financial review—and what should you look for when you do?

That’s a question I’ve asked myself a lot in the past month or so, because while it doesn’t feel like a lot has changed for me financially, feelings aren’t facts. When I stop to look at my financial life objectively (which I had to do to prepare for tax season this year) it turns out there have been some pretty major things going on with my money.

  • I got married
  • I earned significantly more than in previous years through my side hustle and full-time job

Well OK, that’s only two things, but they’re big ones! And experiencing two of them in one year definitely calls for a financial review to make sure everything is still aligned with my goals, our goals, and our household income.

Since even I spaced a bit that these big events called for a closer look at my finances, I wanted to pull together a list of some of the Big Money Events that should trigger you to review your finances—and your financial products—to make sure they’re still aligned with your goals.

I worked with the Canada Deposit Insurance Corporation (CDIC) to put this list together, because if you haven’t heard, CDIC is an important—and awesome—part of your financial life if you live in Canada.

Here’s how CDIC deposit insurance works

If you’ve never heard of them, check this out: CDIC is a federal Crown corporation (aka, the government) that protects eligible deposits at member financial institutions in case they fail. They’re funded by premiums paid by their member institutions, so they don’t receive government funds to operate.

If your financial institution—bank, federal credit union, online savings account, etc—is a member of CDIC, your money is insured and backed by this federal Crown corporation up to $100,000 in seven different categories. So if you have $100,000 in an account in your name, $100,000 in a joint account, and $100,000 in a TFSA in cash, all three of those accounts are covered, even at the same institution.

It’s one of the things that I always look for when opening a new account, because I know that if my bank fails, my money is covered automatically up to my coverage limits. Oh yeah, and did I mention CDIC coverage is free? You don’t need to sign up. (All of the banks and savings accounts I personally use and recommend are CDIC member institutions!)

And when you’re looking, here’s what to look for specifically:

Getting a raise

First of all, high fives for getting a raise! Look at you go, career superstar.

Now that you’re earning more money, there are some things you should take a look at in your financial life to make sure they’re aligned with your new, more baller salary.

  • How much are you saving for retirement? Most retirement savings guidelines are based on a percentage of your income, so when your income goes up, so does your recommended retirement savings amount. Consider putting part of your newly-increased salary towards retirement to make sure your percentages stay aligned. If you’re saving in an RRSP, find out if your portfolio is protected by CDIC.
  • Budget and goals review. Retirement isn’t the only financial goal out there, so when you’re considering how to use your newfound cash every month, make sure to consider your other goals, too. That’s everything from paying down debt to saving an emergency fund, and those are great goals to give a small bump when your new salary takes effect. And of course, by leading with how much you’d like to allocate to your goals, you’ll make sure to keep lifestyle inflation in check—but feel free to give your fun budget a boost, too.

Buying a house

Buying a house was one of my favourite financial milestones, and while not everyone has to buy a house, if it’s a fit for you and something you want to do, yay! Congratulations on taking the plunge into home ownership.

Now that you own your place, there are some key things you need to do.

  • Do a full budget review. Buying a house shouldn’t mean giving up spending on everything else you like, but there are usually additional costs you might not have experienced as a renter. As such, this is a great time to sit down and build a budget from scratch to account for all of your potentially-new fixed costs.
  • Review your insurance and your needs. First and foremost, you at least have one new type of insurance: home insurance. Make sure to read your policies from cover-to-cover (yes, seriously) and figure out if you need any other new types of insurance as well. For example, when my husband and I bought our house, we each got term life insurance policies so that the other would be able to financially manage the house in a true worst-case scenario. If you’re buying with a partner, you need to prepare for the worst.
  • Track your spending. Because there’s no way to fully predict every cost that will come up, you really do need to track your spending during the home-buying process and for the first few months in your new digs. From the minute you buy your place, until about three full months in, make sure to track every penny (using an app or a spreadsheet) so you can see exactly where your money is going. You don’t need to do it forever, but it’s all too easy to go into debt, or estimate your budget wrong, if you don’t keep an eye on your money during the transition.

A net worth milestone

If you don’t track your net worth, it’s a great financial habit to build into your life. While there’s no one perfect metric to measure your financial health, your net worth can help you understand general, high-level trends with your money—and notice when you hit big milestones.

One of the Big Kahuna milestones is hitting $100,000 in net worth, especially when you’re in the early stages of your career (like, under 40, take a breath). When you do, there are some things you need to review when it comes to your finances.

  • Review where you keep your money. If your $100,000 milestone is invested, now is a great time to check on your investments, particularly your fees. You now have what most people consider a Large Portfolio, and fees are going to make a big difference going forward. If you’re investing in mutual funds, fees are typically going to cost you over 2% per year, which now runs you about $2,000. Compare that to roboadvisors, which charge less than a percent for most portfolios, in which case you could save $1,000 or more.
  • Make sure your money is insured by CDIC. It’s always important to know if your financial institutions are covered by CDIC, but now that you have a really substantial amount of assets, you may want to make sure you’re being strategic with where you’re keeping it. CDIC insures eligible deposits up to $100,000 held at each of its member institutions in seven different categories, so that in the event of a bank failure, your money is safe and will be returned to you up to your coverage amount. What counts as an eligible deposit? Savings accounts, chequing accounts and term deposits (like GICs) with original terms to maturity of five years or less, to name a few, are all eligible deposits. What’s not covered? Mutual funds, stocks, bonds, digital and cryptocurrencies are a few products that are not protected by CDIC. When doing a thorough financial renew it’s important to find out exactly how much of your savings you’d be left with if your bank failed. Not sure if you’re covered? Use CDIC’s handy calculator to find out.

Getting married

I got married this year, and it was magical (while also being debt-free, thanks to all the ways we saved money on our party). While planning a wedding is a financial feat unto itself, it’s also a great introduction to setting a financial goal and working towards it as a team, which is heckin’ useful because you’re going to be doing that much more now.

I’m not here to tell you how to manage your money now that you’re married, although I’m happy to share how we manage our money post-wedding—but there are a few tasks you’ll need to look at regardless of whether you want a joint account or not.

  • Shared goals. What do you two see in your future—and how much will those things costs? Boom, you now have shared financial goals. You should plan some time to sit down (with a beverage of choice) and map out how much you can afford to save each month towards those goals, and what your timeline looks like based on those numbers.
  • Joint accounts. You don’t need a joint account to share your finances, and having one doesn’t automatically mean you’re doing it right, but you should investigate if adding a joint account makes sense for you. If you do plan on merging accounts, make sure to keep CDIC insurance coverage in mind, and pay attention to both your banking fees and interest rates. If you could save money by going with a no-fee chequing account or a high-interest savings account, it’s worth considering if you’re making moves anyways.

Having a baby

A BABY! Very exciting news, and I’m so happy for you!

Babies are not an inexpensive undertaking, especially if you factor in lost income from one or both parents taking parental leave. There are also a lot of things you’ll need to brush up on and review to adjust for this big financial milestone.

  • RESPs. The Registered Education Savings Plan is an amazing account to help you save for your child’s education, and the Canadian government will match your contributions with 20% of $2,500 every year (more for some families based on income). You won’t find a guaranteed 20% return anywhere else in finance, so it’s important to figure out how you can use the RESP to your child’s advantage earlier rather than later. RESPs can fall under the trust category of CDIC coverage if they are set up as one. So check in with your advisor and find out if your child’s education fund is protected.
  • Parental leave budgets and terms. Dropping down to living on employment insurance is an adjustment no matter how you slice it, so planning ahead for how you’re going to manage financially during leave is key. Here’s a good overview of the benefits you could receive, although there’s no way to guarantee what you’ll get until you apply. Additionally, you should brush up on the terms of those EI payments to make sure you understand the tax implications—and what side hustling will do to your payments.

When in doubt, find a planner

Listen, these are all major life events, and as such, they’re also all a great time to speak to a certified pro about your money if you’re feeling unsure. A fee-only CFP will be able to give you the best, most comprehensive advice about your personal money situation—and they know the ins and outs of programs like CDIC and how they can benefit you.