What is a financial plan?

5 key benefits to starting your financial plan

Whatever your financial goals are – saving for your children’s education, retiring comfortably or leaving something for your loved ones – having a financial plan is important. With it, you can take better control of your finances and know you have a plan in place to help you achieve your goals.

What is a financial plan?

Think of a financial plan as your personal roadmap. It considers your current financial situation and future goals and should include an assessment of net worth (assets vs. liabilities), cashflow (i.e., income and spending), taxes, retirement planning, estate analysis, and in certain cases, insurance planning.

While everyone’s plan will be unique to their specific goals, a financial plan is designed to help answer three key questions:

Where are you now financially?

What would you like to achieve – both short and long term?

How will you get there?

While having a financial plan is a great start, it’s important to remember that to provide its maximum benefit, your plan needs to be continually updated to reflect the ongoing changes in your life. That includes everything from marriage and the birth of a child to career changes or a new home purchase, just to name a few

Most Canadians do not have a written financial plan !

5 key benefits to starting your financial plan

1. Provides a reality check

Not knowing where you stand financially can be extremely stressful. That’s why it’s essential to get an objective assessment of your overall financial health. A financial plan can help point you in the right direction financially and help you understand your spending and saving habits.

Interested in learning more about your income and expenses ? We can help you determine if you have additional funds available to put towards your financial goals by comparing your income to your expenses.

2. Helps you set realistic goals

Everyone has financial goals, but many people don’t know if their goals are attainable. A financial plan will help you define realistic goals and outline a strategy for achieving them. Setting realistic goals will also go a long way toward minimizing unpleasant financial surprises.

3. Helps identify opportunities

A financial plan can help identify opportunities to save – or perhaps reduce one’s tax burden. For instance, depending on your life stage, topping up your RRSP or TFSA may be something to consider. We here at Innovative Wealth Management can help you navigate both potential opportunities and challenges and recommend a course of action to help you save money, and earn money.

4. Plan for unexpected events and risks

A financial plan can help you identify certain risks and plan accordingly. For example, do you have a will or enough insurance to maintain your family’s standard of living in the event you pass away or become injured or disabled? Is there an emergency fund established to cover job loss or major home repairs? A financial plan can help analyze your current situation in order to put in place appropriate safeguards.