The truth about financial planning

Financial planning can be daunting, especially when most of us are unsure about what it is. Here are some truths about it.

“You’re a financial planner? So you, like, sell mutual funds and stuff? I’d ask for your advice but I’m sure you’ll tell me I can’t afford the vacation I just booked…”

This in an all too common response when I tell people I’m a financial planner. It’s disappointing because it’s wildly inaccurate, so I would like to set the record straight: my job is to help people achieve financial freedom by making smart decisions with their money. Let me explain.

It’s all about freedom

We all want to be happy, and most people believe that having more money, or being “rich,” will solve their problems and therefore make them happy. What I’ve come to understand is that happiness does not come from simply being rich and having money, but rather from the feeling of freedom that money provides — freedoms such as working because you enjoy it, spending lots of quality time with loved ones and having peace of mind that the bills will be paid.

The purpose of financial planning is to figure out how to use your money to create this financial freedom and feeling of richness. It might not require as much money as you think, and you can do it with the resources you already have.

Two common misconceptions

Let’s now revisit that opening statement which contains two common misconceptions about financial planning.

First, it’s not about selling financial products such as mutual funds or insurance. These products are simply part of the implementation of a financial plan, and selling these products without going through the planning process is like a doctor prescribing a medication before examining the patient. In fact, many financial planners opt not to sell these products at all, focusing instead on analyzing your financial situation and recommending strategies to achieve your goals.

Second, financial planning is not about making judgements about your priorities. It’s is a very personal process where your unique values and goals are discussed first, followed by strategies on aligning your spending with these values and goals. If regular travel or dining out is important to you, your financial planner will help you understand the trade-offs you can make to include this kind of spending in your budget while working towards your long-term financial freedom. You won’t have to worry that you can’t afford it because you’ll know that you can.

Bottom line

Money can’t buy happiness, but you can use your money to invest in the feelings and experiences that make you happy. A financial planner will help you get clear on what’s most important to you and design a financial plan that aligns your spending with these values. When you’re clear on the values that bring you happiness, you can find ways to incorporate them into your every day and you’ll feel that you’re living a richer life.

Next week I’ll explain how this is achieved through the financial planning process.


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

About the Author

Lisa Zamparo, CPA, CA

Lisa Zamparo, CPA, CA, is a financial planner in Toronto who helps young professionals learn how to make smart decisions with their money. Her personalized approach to financial planning helps her clients achieve their life goals by aligning their spending with their priorities. As a “Big 4″ trained Chartered Professional Accountant, Lisa believes the lessons learned from some of the best-run companies in the world can be applied to managing personal finances. She works with clients to apply these lessons and teaches them how to take control of their finances and their future.