|Achieving your financial goals doesn’t happen overnight; it takes careful planning and execution.
planning is important as the process enables you to clearly identify
your priorities and focus your resources on achieving your objectives.
The financial planning process
Financial planning is an ongoing process that includes:
- Evaluating your current situation
- Clarifying your goals
- Identifying hurdles in achieving your goals and considering alternative solutions
- Developing a comprehensive written analysis with recommendations
- Implementing your plan
- Reviewing your plan on a regular basis
Why do you need a financial plan?
A good financial plan can help you answer these questions, and more...
- Will you be in a position to fund your children’s post-secondary education?
- Will you be responsible for the care of an aging parent or spouse, or a mentally or physically challenged child?
- Is your investment strategy consistent with your financial goals?.
- If you were to die, would your family be financially secure?
- If you become disabled, will you have enough income to manage until you are well again?
Your financial plan
financial plan provides you with a comprehensive assessment of your
financial situation and helps you determine if your existing investment
strategy is in line with your goals. Your plan includes a review of
- Current financial position: Your financial
position is a combination of your net worth (assets, minus liabilities)
and your annual cash flow (income, less expenses and savings). This
information provides an overview of the financial resources currently
available to meet your goals.
- Investment planning:A
successful investment strategy begins with asset allocation. A review
of the asset mix for each of your investments, registered and locked-in
accounts is completed and then compared to what is being recommended for
accounts with investment objectives similar to yours.
- Education planning: By analyzing the expected costs and setting up a savings strategy, you
can help ensure that your children get the education they deserve.
- Major purchase planning: If you have a major purchase on the horizon, such as a dream vacation,
new vehicle or a vacation property, your existing savings strategy is
compared to the future purchase cost to determine whether your current
strategy will allow you to meet your goal.
- Retirement planning: Combined sources of retirement income are measured against retirement
goals to ensure you can maintain your desired lifestyle throughout
- Estate planning: A summary of your
estate’s distributable assets and obligations is provided, (e.g., income
taxes, probate costs and debts) including an overview of the income
needs of the surviving spouse and if more capital is needed to support
the survivor’s lifestyle.