Spring isn’t just a time for smelling the flowers, with income tax season just behind us and property taxes on the horizon, it’s also a time when many of us have to face up to truth about our financial situation. If you’re like most Canadians, chances are you’ve had your share of sleepless nights worrying about debt or other financialproblems. According to the Financial Planning Standards Council (FPSC), a large number of Canadians have identified personal finances as one of the major sources of stress in their life. It’s no wonder; the news is filled with stories about rising household debt levels, the dismal savings rate and gloomy odds for a happy, healthy and financially secure retirement.
Having a financial plan isn’t just for rich people and it doesn’t have to be expensive. Some financial institutions provide this service free of charge, ask yours if they do. In any case, mapping out your financial future isn’t as difficult as you think and whether you work with a financial advisor or do it on your own here are four things your plan should include:
A view of the big picture: Your financial well-being isn’t just about investments, it's about many aspects of your life...saving for a home, protecting your family with insurance, planning for the unexpected, structuring debt properly and making sure you have enough left over for the fun and relaxation you deserve. Start by creating a financial statement that shows everything you own and everything you owe, so you can get a clear picture of your net worth.
Set some goals: Make a list of your most important goals. This should include both short term goals (say 2-5 years) as well as long term goals (5+ years). Keep each list to a few items or prioritize the items and focus on a few at a time.
Decide how you will measure your goals: The difference between dreaming and doing is action, but it can be difficult to know where to start. Having a way to measure goals makes it easier to get going and setting monthly targets will help you keep moving in the right direction. Making a budget that details all of your income and expenses will make it easier to see exactly where your money is going.
Re-evaluate regularly: Your life is always changing and unexpected things can happen along the way. Your plan needs to change right along with you, taking important life events into consideration so you can keep your dreams on track.
It’s very common to feel stress about personal finances: “Am I saving enough for the future? How do I choose the right investments? Am I living beyond my means? Why is it so difficult to scrape together a down payment? Do I have enough insurance coverage?” These are the kinds of questions that can keep you up at night when you don’t have a financial roadmap. If you`re feeling overwhelmed, a financial advisor can help you plot that roadmap and take control of the big picture so you don’t have to worry...which means you can get on with life and look forward to planning the things you want to do.
This article is courtesy of Prospera Credit Union (to learn more, visit www.dontjustbankprosper.ca)