Financial planning for peace of mind, part 1

Comprehensive financial planning encompasses all aspects of financial, and even non-financial affairs, irrespective of how the markets perform. Learn how you can gain peace of mind about your financial future.

The purpose of a comprehensive financial plan is to achieve peace of mind through knowing that you are on track to meet your life goals.  It encompasses retirement planning, tax planning, risk management, estate planning and business succession planning.  This two-part blog will provide you with tips on implementing a comprehensive financial plan.

Step 1: Define your goals

We all are busy day-to-day.  That can make it difficult to think about the future and to clearly define our goals.  Here are some questions to ask yourself when considering your own goals:

  • What is your bucket list of life adventures you want to undergo?
  • What do you want to do in retirement — together with your spouse? Without your spouse?
  • Where do you want to live?
  • How much are you spending now?  Will it change down the road based on future endeavours?
  • How do you feel about your personal health?  What is your family’s health history?
  • Is there someone with a disability/someone you want to ensure is financially taken care of?
  • What are your top priorities or concerns?
  • Is there anything you wish not to happen — that you want to plan to avoid/mitigate the risk?

Step 2: Understand your current financial status

Next, gather information to summarize your current net worth and cash flow, including:

  • recent tax returns
  • bank statements, mortgages, lines of credit
  • investment account statements
  • pension statements
  • current value and cost of other assets – that is, properties, business, and so on
  • insurance policy statements
  • wills and powers of attorney

Use this information, your goals and savings plan, to prepare current cash flow and net worth statements with projections using financial planning software. Spreadsheets can also be used, although planning software can be very robust for accurate calculations of tax, investment withdrawals and estate taxes, as well as efficiently adapting to changes in your situation.

Step 3: Consider strategies and tools

Once you have initial projections, consider strategies and tools that may make sense for your situation.  Some of the most common strategies to consider are:

  • increasing current savings
  • Tax-Free Savings Accounts vs. Registered Retirement Savings Plans (RRSPs) vs. employer pension plans
  • critical illness, disability, long-term care and life insurance to transfer risk to a third party
  • asset location, based on asset class and the type of income (interest, dividends, capital gains), so that assets are in tax efficient accounts
  • when to take Canada Pension Plan (CPP) benefits — that is, 60 or 65
  • Registered Retirement Income Fund (RRIF) meltdown plan – you can convert to an RRIF before age 71 to level out your income in retirement, lowering estate taxes as RRSP/RRIF account balances are fully taxable on death, thus minimizing tax over your lifetime
  • pension income splitting
  • income splitting with adult children using a family trust
  • wills and powers of attorney

A few general strategies for business owners:

  • health spending accounts
  • a personal pension plan
  • key person coverage
  • business transition planning strategies

In part 2 of this blog post we will discuss:

Step 4: Developing the plan

Step 5: Implementing the plan

Step 6: Monitoring and evaluating your financial plan

Keep the conversation going

Comprehensive financial planning is meant to help us maximize our Return on Life (ROL), ultimately for the peace of mind that we will enjoy when we achieve our financial goals.  As a first step, have you thought about defining your goals?  If so, what other questions have you considered that are important to you?  Post a comment below.


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.