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Researching how making my money work for me has always been a point of interest for me. So I think the most interesting part of this assignment would be reading the various articles about how to go about doing exactly that, and seeing other options I didn't previously think of that I should consider before investing more into making my money work.

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Financial planning is relevant to everyone should you so choose to actually create a plan. By better understanding how much I earn per month, I can delegate my money to best work for me, pay off my student loans, credit cards and work towards my financial goals.

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The most surprising thing I learned while creating this padlet, is the advice from Rona Birenbaum. Specifically about having a mediator to lay everything on the table with your partner to create a financial plan for your family's future as well as your own.

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Welcome to our Financial Planning research!

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Welcome to our Financial Planning research!

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In this fancy little wall of information you will discover few of many articles, pictures and videos all created by professionals in the field of finances! After viewing these items, we hope you learn and recognize as much as we did during our research!

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By: Corey Bain & Colton Wicks

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What Is a Financial Plan?

A financial plan is a document that details a person's current financial circumstances and their short- and long-term monetary goals. It includes strategies to achieve those goals.

A financial plan can help you to establish and plan for fundamental needs, such as managing life's risks (e.g., those involving health or disability), income and spending, and debt reduction.

It can provide financial guidance so that you're prepared to meet your obligations and objectives. It can also help you track your progress throughout the years toward financial well-being.

Financial planning involves a thorough evaluation of one's money situation (income, spending, debt, and saving) and expectations for the future. It can be created independently or with the help of a certified financial planner.

Understanding a Financial Plan

Whether you're going it alone or with a financial planner, the first step in creating a financial plan is to understand how important it can be to your financial future. It can provide the guidance that assures your financial success.

Start your planning effort by gathering information from your various financial accounts into a document or spreadsheet.

Then make some basic calculations that establish where you stand financially.

You may complete the following steps as an individual or a couple:

Calculate Net Worth

To calculate your current net worth, subtract the total for your liabilities from the total for your assets. Begin by listing and adding up all of the following:

Your assets: An asset is property of value that you own. Assets may include a home, a car, cash in the bank, money invested in a 401(k) plan, and other investments accounts.

Your liabilities: A liability is something you owe. Liabilities may include outstanding bills, credit card debt, student debt, a mortgage, and a car loan.

Determine Cash Flow

Cash flow is the money you take in measured against the money you spend. To create a financial plan, you must know your income as well as how and when your money is spent.

Documenting your personal cash flow will help you determine how much you need every month for necessities, how much is available for saving and investing, and where you can cut back on spending.

One way to get this done is to review your checking account and credit card statements. Collectively, they should provide a fairly complete history of your income and spending in a wide range of spending categories.

For example, document how much you've paid during the year for housing expenses like rent or mortgage payments, utilities, and credit card interest.

Other categories include food, household (including clothing), transportation, medical insurance, and non-covered medical expenses. Still others can include your spending on miscellaneous entertainment, dining out, and vacation travel.

Once you add up all these numbers for a year and divide by 12, you'll know what your monthly cash flow has been (and where you can improve it).

Establish Your Goals

A major part of a financial plan is a person's clearly defined goals. These may include funding a college education for the children, buying a larger home, starting a business, retiring on time, or leaving a legacy.

No one can tell you how to prioritize these goals. However, a professional financial planner should be able to help finalize a detailed savings plan and specific investing that can help you reach them one by one.

Benefits of a Financial Plan

A financial plan involves a thorough examination of your income and spending.

It can improve your understanding of your financial circumstances at all times.

It establishes important short- and long-term financial goals.

It clarifies the actions required of you to achieve your various financial goals.

A financial plan can focus your attention on important immediate steps, such as reducing debt and building your savings for emergencies.

It enhances the probability that you'll achieve financial milestones and overall financial success (however you define it).

It can guide your efforts over time and provide a means to monitor your progress.

It can keep you out of financial trouble and reduce the stress and worry you may have experienced in the past.

When to Create a Financial Plan

A financial plan is always an advantage for those who want to make sure that they manage their finances in ways that are best-suited for them. You can create one at any time, whether you've just joined the workforce or have been working for years.

Beyond that, here are some particular instances that call for the creation and use of a financial plan. They can also serve as signals to adjust existing plans.

A new job that results in added income, new expenses, or new opportunities

An income change that can affect your ability to pay expenses, pay off debt, or save

Major life events such as marriage, children, or divorce that can change financial objectives and spending needs

Health adversities that result in re-directing income and spending away from existing goals

An income windfall, such as an inheritance or insurance payment, that can affect efforts to reach your financial goals (such as providing more money for investing and debt reduction)

How to Create a Financial Plan

Certain steps are needed to create a financial plan. In addition to calculating your net worth, determining your cash flow, and establishing financial goals, as outlined above, here are additional plan elements/steps to include.

Do It Yourself or Get Professional Help

Decide whether you'll create your financial plan on your own or with the help of a licensed financial planner. While you can certainly build a financial plan, a financial pro can help ensure that your plan covers all the essentials.

Build an Emergency Cash Fund

Based on what your cash flow allows, start setting aside enough money in a liquid account to cover all your expenses for at least 6 months (preferably, for twelve) if you find yourself without income due to unexpected events.

Plan to Reduce Debt and Manage Expenses

If you have debt, the faster and more effectively that you can eliminate it, the better for the growth of your savings, your standard of living, and the achievement of specific financial objectives.

Make it a habit to cut expenses whenever possible so that you can add to your savings. In addition, stay on top of expenses that you know you'll have, such as taxes, so you always meet those obligations on time.

Manage Potential Risks

Your financial well-being can be affected when accidents, health problems, or the death of loved ones strike. Plan to put into place the appropriate insurance coverage that will protect your financial security at such times. This coverage can include home, property, health, auto, disability, personal liability, and life insurance.

Plan to Invest

Take part in a retirement plan at work that automatically deducts contributions from your paycheck. And plan to maximize your tax-advantaged investing with a personal IRA if and when your income allows.

Also, consider how you might allocate any other available income to a taxable investment account that can add to your net worth over time. Your plan for investing should take into account your investment risk tolerance and future income needs.

Include a Tax Strategy

Address the goal of reducing your income taxes with tax deductions, tax credits, tax loss harvesting, and any other opportunities that are legally available to taxpayers.

Consider an Estate Plan

It's important to make arrangements for the benefit and protection of your heirs with an estate plan. The details will depend on your stage in life and whether you're married, have children, or have other legacy goals.

Monitor and Adjust Your Financial Plan

Revisit your plan at least yearly (on your own or with a financial professional) and more often if a change in circumstances affects your financial situation. Keep it working efficiently and effectively by adjusting it as needed.

What Is the Purpose of a Financial Plan?

How Do I Write a Financial Plan?

What Are the Key Components of a Financial Plan?

The Bottom Line

A financial plan is an essential planning tool for your financial well-being, now and into the future. It involves setting down the current state of your finances, your various financial goals, and methods that can help you achieve them.

It's never too early or late to create a financial plan. And no matter the amount of money that you have, a financial plan can help you to determine the best way to put it to work so that you can meet your financial needs through all of your life stages.

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Financial Plans: Meaning, Purpose, and Key Components

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A financial plan is a document detailing a person's current money situation and long-term monetary goals, as well as strategies to achieve them.

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MoneySense - Canada's personal finance website

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https://www.getsmarteraboutmoney.ca/plan-manage/planning-basics/financial-planning/what-your-financial-plan-should-cover/

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Financial planning includes every aspect of your finances. Your financial plan Financial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down debt, insurance, taxes, retirement planning and estate planning. + read full definition should cover:

5 reasons to have a plan

1. Prioritize your financial goals - For example, if you buy a new car now, will you have enough savings later to buy a house or go back to school? Which of these goals is most important to you?

2. Save money to reach your goals - You may find it easier to save when you know what you're saving for.

3. Focus on the bigger picture - Your financial plan considers everything from watching your spending to managing your investments to minimizing your taxes.

4. debt Debt Money that you have borrowed. You must repay the loan, with interest, by a set date. Organize your finances - A financial plan can help you balance spending and saving, keep track of expenses and manage + read full definition .

5. Worry less about money - With a plan, you'll know where you are today and how to get to where you want to go.

Prioritize your goals

Use this Prioritizer Calculator from CNN Money to help you rank your goals in order of importance to you.

5 key points

A financial plan can help you:

1. Prioritize your goals

2. Save money

3. Focus on the bigger picture

4. Organize your finances

5. Worry less about money

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What your financial plan should cover | Financial planning | GetSmarterAboutMoney.ca

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Financial planning includes every aspect of your finances. Your financial plan Financial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down debt, insurance, taxes, retirement planning and estate planning.

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https://www.thebalance.com/five-steps-to-an-effective-financial-plan-2386045

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https://moneycoachescanada.ca/blog/abcs-financial-planning/

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In today's hectic world, most people have neither the time nor the expertise necessary to navigate the financial complexities of modern life. They need help making sense of it all, and would benefit from a comprehensive, thoughtful approach to money matters.

For many Canadians, 2018 will be the year they get their financial house in order, and take their first few steps towards improved financial well-being. And a detailed financial plan will be their roadmap.

If you are like many Canadians, you're anxious about your finances. Seven out of 10 Canadians say they worry a lot about their financial situation and nearly 80% don't have confidence that they'll achieve their financial life goals. These result aren't terribly surprising - Canadians are facing the most challenging economic times in decades. Personal debt is at an all-time high, the cost of home ownership is out of reach for many, and day-to-day living expenses are outpacing income growth. Don't forget about the ongoing concerns about funding retirement, and your child's education. Add in the potential for having to cover some health care costs for aging parents and it's no wonder Canadian's are financially stressed out.

A financial plan helps you see the big picture. When you have a plan, it's easier to make financial decisions, stay on track, and achieve your goals. It will give you confidence, and the direction to ensure progress is made in all facets of your financial well-being. And for those experiencing a major life change or transition such as retirement, marriage, divorce or job loss, the process of creating a financial plan will help address the complexities these life changes often bring.

The benefits of financial planning are clear. The results of a three-year longitudinal study of 15,000 Canadians, conducted on behalf of Financial Planning Standards Council, revealed that those who engaged in comprehensive financial planning have significantly higher levels of financial and emotional well-being. Individuals with a financial plan have a better handle on their cash flow, have a plan to pay down debt and are more prepared for emergencies. They have a better understanding of their investments, they know what to do to retire comfortably and have greater peace of mind.
A Financial Roadmap
Unfortunately, many Canadians are held back by the common misunderstanding that financial planning is just about budgeting, or that it's only about investing for retirement. Some believe that financial planning is for anybody but them, that they are too old, too young, or not wealthy enough. The fact is, most Canadians can benefit from financial planning, regardless of life stage or situation.

A financial plan is a tool with well-defined objectives. It's a roadmap that helps you define your financial life goals and provides the tools, information and structure necessary to organize your finances and make the most of the money you have. It can help answer a wide range of questions, both short and long term, including:

Where does all of my money go each month?

How do I get ahead financially?

What do I need to do to retire comfortably?

How can I afford to work part-time, have a baby or start a new business?

Can I manage the expenses of buying a new home?

How should I manage my money if I've recently become widowed or divorced?

Should I put my money into an RSP's or pay down the mortgage?

What's the best way to finance my child's education?

Do I have enough to create a financial legacy for my children and grandchildren?

Can I provide additional financial support to the charitable organizations that mean the most to me and my family?

A financial plan will help you answer these questions in an organized, structured manner. By creating a financial plan, you will know the necessary steps to get from where you are now to where you want to be with greater confidence and ease.

A Financial Planner typically provides a written financial plan which outlines your goals, challenges and considerations, recommendations and action plan. A comprehensive written financial plan generally includes the following:

A clarification of your short, medium and long term goals

A statement of Net Worth

An analysis of your cash inflows and outflows

A detailed budget and debt-reduction strategies

A review of your current investments and investment strategy advice

Projections regarding your retirement, including pension recommendations

A review of your insurance needs, group benefits and estate planning, including recommendations

The action steps needed to implement your plan

Although the planning document is a valuable tool, the real benefit is in the planning process and understanding that financial planning is a lifelong, dynamic process. Here's how one Money Coaches Canada client described the benefits of the financial planning process:

"I felt scattered and not really sure where to start or what specific areas to look at. Now I feel like I have been given a direction and a map to follow. I can see exactly what I need to do, and I feel more confident following through with these steps knowing that there is someone I can speak with if I run into any problems. I now have a trusted ally that I can work with through every stage of my life."

When you have the right plan for your circumstances, covering every area of your financial life, from investments to tax planning, insurance needs and retirement planning, you can balance what you need and want today with the personal goals you have for the future.
The Difference Between a Financial Planner and Investment Advisor
A Financial Planner's service offering is usually much more broad than that of an Investment Advisor. A Financial Planner employs the financial planning process to help manage all aspects of your personal finances more successfully. All of your financial needs will be considered including cash flow analysis and budgeting, debt management, tax planning, investment planning, insurance, retirement and estate planning. The ideal Financial Planner is an independent voice that places a strong emphasis on personal financial education so that you are better informed, more confident and in control of your financial affairs. Unlike Money Coaches with Money Coaches Canada, some Financial Planners also provide investment management services.

Most investment Advisors, on the other hand, provide only investment management and investment-related advice. An Investment Advisor may help broker the sale and purchase of stocks and mutual funds or make recommendations on developing a balanced investment portfolio. They do not, in general, get involved in any other aspects of your financial well-being.

There are many different compensation models for investment advisors. It's important to know how your advisor is being paid. Most investment advisors either derive their income from sales commissions or by charging a fee based upon the amount of money they are managing on your behalf. Some investment advisors also receive sales commissions for selling other financial services products, such as insurance products, or loans.

If you are interested in hiring a professional to provide holistic, comprehensive financial advice, a Financial Planner is a better choice. But choosing the right Financial Planner takes careful consideration. To begin, it's important to understand that financial planners generally fall into two categories.

1. Financial Planners licensed to sell investments or insurance
Typically, this type of Financial Planner will provide you with a financial plan for free if you purchase, or intend to purchase, investments or insurance with them. Others referred to as fee-based or asset-based Financial Planners may charge a fee for the plan then give you with the option to invest or buy insurance from them.

The model of Financial Planners licensed to sell financial products is the most common one with the advantage of being a one-stop-shop for clients looking for financial planning and investment management. However, there is also a potential for conflict of interest in a model that blends planning advice and financial products. Ask for full disclosure on what services you can expect, how the planner will be compensated, and the overall fee you will be paying.

2. Financial Planners who don't sell financial products
Fee-for-service or advice-only Financial Planners or Money Coaches charge clients a fee either hourly or by project. Fees typically range between $2,500-$5,000 per engagement depending on the complexity of planning needs.

Some advice-only Money Coaches provide comprehensive financial plans and others will help you address specific issues such as getting out of debt or saving for the things you want.

The terminology in the financial advice industry is not standardized so be sure to ask questions and to clarify what you can expect from your advisor no matter what model of financial advice works best for you.
Where to Find a Financial Planner
Finding the right financial planner requires due diligence and takes some homework. It's wise to interview more than one Financial Planner and be prepared to ask them some very specific questions. Here are a few questions to ask a Financial Advisor before hiring them. The personal finance magazine MoneySense also maintains their own data base of MoneySense Approved Financial Advisors.

The clearer you are on what you are looking for in terms of guidance and what you expect from the relationship, the more likely you will find a Financial Planner that works for you. Do your homework, take advantage of complimentary consultations, ask questions, and trust your instincts.
Need Help Creating Your Financial Plan?
At Money Coaches Canada, our Money Coaches will help you develop a clear understanding of your financial situation, create a plan to reach your goals, and provide unbiased advice to keep you focused and on track.

If you are looking for transparent, commission-free advice that considers all aspects of your financial well-being, consider a Money Coach. A Money Coach is a fee-for-service financial professional that doesn't sell investments, insurance or financial products. They are experts whose sole interest is your financial success.

To book your confidential, free initial consultation with a Money Coach, please contact Money Coaches Canada today.

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A Financial Plan is a Roadmap - Money Coaches Canada

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In today's hectic world, most people have neither the time nor the expertise necessary to navigate the financial complexities of modern life. They need help making sense of it all, and would benefit from a comprehensive, thoughtful approach to money ... Continue reading →