Financial planning for peace of mind, part 2

You’ve already done your homework from Part 1 and have the foundation ready to prepare a comprehensive financial plan. Now, Part 2 explains how to make, implement and monitor that plan.

In part 1 of our financial planning blog, we spoke about the importance of defining your goals, and understanding your current financial situation.  Part 2 of this blog outlines the importance of developing and implementing the plan, as well as the importance of continuous self-evaluation.

Step 4: Develop the plan

After you analyze the strategies that make sense for you, compile them together in a comprehensive financial plan. This will clearly summarize:

  • your goals — financial and non-financial
  • current spending and future spending
  • cash flow and net worth projections
  • an analysis of how strategies measure up to you meeting your life goals or identifying if further strategies are required
  • your current asset allocation — mixture of fixed income/bonds, equities/stocks and real estate — compared to your personal risk profile and investment objectives
  • what-if scenarios — if one spouse cannot work, becomes ill, has a heart attack, requires long-term care, etc.
  • estate matters — what you wish to happen, what you wish to avoid happening and what your beneficiaries will receive on an after-tax basis
  • perform a second review of the outcomes and strategies; consider if making any revisions can further enhance your situation
  • prepare an action plan (an itemized checklist to implement the plan); prioritize the items and include a timeline of when each area will be executed

If you are doing the planning yourself, consider having a Certified Financial Planner (CFP), Chartered Professional Accountant (CPA), insurance advisor and estate lawyer review your plan for peace of mind that all areas are addressed properly. Ideally, these professionals are with the same team and have a fiduciary responsibility to act in the best interest of clients in order to avoid any potential bias.

Step 5: Implement the plan

Next is implementing the plan. We all have busy lives and this is where many have difficulty. Refer to your action plan and timelines. You may also consider calendar reminders to stay on track. Address the most important items first. Typically, the most important items are:

  • reviewing wills
  • a thorough understanding of expenditures
  • talking about your health and family health history
  • other strategies, some of which were discussed in my previous post  

Step 6: Monitoring and evaluation

Once you have implemented all aspects of your comprehensive financial plan, take the time to review it at least annually and when significant changes occur, such as:

  • a marriage or separation — either between you and your spouse or a child and their spouse
  • the birth of a child
  • changes in income or anticipated changes in lifestyle spending

That is a summary of steps to undertake in financial planning. I hope that it helps you to glean some insight.

Keep the conversation going

How often do you review your current financial plan? Post a comment below.

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Andrew Brydon, CPA, CA

Wealth counsellor, Wealth Stewards Inc.
Andrew provides holistic wealth management services to families and business owners. Andrew helps families achieve peace of mind and enhance their wealth through working with a team of experts to provide holistic, objective and innovative advice in all facets of their financial affairs.

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