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Everything You Need to Know About a Financial Plan

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Everything You Need to Know About a Financial Plan

Written by Caitlin Wood

Everything You Need to Know About a Financial Plan


Budget Financial Planning

Claudia DoRego, Planswell

As you begin to plan out what you would like your financial future to look like, based on both your short and long-term goals, you’ll realize that there is a variety of money managing strategies that you can use to help. A term that you have likely heard before is “financial plan”.

A financial plan provides you with an essential map for how to handle your money in a way that not only reduces your stress but builds financial stability and security. This tool is crucial for meeting any financial goals, such as buying a house, paying for your children’s post-secondary education, or creating that nest egg that will carry you over long after you’ve collected your final paycheck.

What Are The Elements of a Financial Plan?

Everyone’s financial goals are unique to their situation. So of course, each financial plan will vary from person to person. However, generally speaking, financial plans consist of your financial goals, an overall analysis of your current financial situation as well as a plan to achieve your goals within a specific time frame.

You should expect your financial plan to tell you three major things:

1.How to save on borrowing,

The amount you pay towards interest can be one of the biggest expenses of your whole life. Minimizing interest costs – especially if you have equity in your home – is often a huge financial lever that you can pull. The money you save by reducing debt payments can often help you afford the investments and insurance that complete your plan.

2. How to invest to build your savings.

Once you max out your retirement accounts, such as a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), you can begin to use other tools such as exchange-traded funds (ETF’s) or real estate as investment strategies. If you maintain consistency with your investments, you will likely reach a point in time when they generate more income than you do.

As you get closer to retirement, you may want to change the way that you invest. It’s important to have stable and safe investments that won’t be as affected by market fluctuations. This way, you will still have the money you need to retire if the economy takes a hit, compared to when you are younger, you have time for the market to recover.

What happens when you over contribute to your TFSA? Find out here.

3. How to protect yourself from the unexpected.

You’ve worked so hard throughout your life to build a solid financial foundation for yourself and your family, so it’s vital that you protect it. Injuries, illness, and accidents do happen, and if you aren’t sufficiently insured, you could be left in financial ruin.  Don’t add financial hardship to an already stressful situation. Life, disability and critical illness insurance add a protective layer to your plan that can be a crucial ingredient for financial security.

Adjust And Evolve Your Financial Plan as You Go

It’s important to remember that your financial plan should be flexible. A plan isn’t meant to be locked-in today, then left alone for decades. It’s much more realistic to have a financial plan that adapts to your life as your career, family, health and other factors change.

What’s Next?

Having a financial plan can help you manage your finances while planning for the future. Though it may seem daunting at the moment, it will undoubtedly pay off in the long run. Not only will you have a clearer path for reaching those significant life milestones, but you will also be better prepared for the future.

Here at Planswell, we know that financial planning can be overwhelming at times. But with some help, and dedication, you’ll end up rewarding yourself by achieving your goals. When you build a financial plan with Planswell, you’re working with people who are committed to providing you with the highest standard of financial planning. We’ll make sure that you’re set up for financial success, with a set of guiding principles to lead you to a better future.

Planswell is a financial planning company. Grow your wealth. Manage your borrowing. Protect your assets. Planswell gives you a free plan that ties investments, insurance, and mortgages together so you can maintain your lifestyle throughout work and retirement.

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