Elizabeth O’Connor of RBC: Add – writing a financial plan – to your list of new year’s resolutions

Happiest of Holidays to you!

As we sit at the beginning of a shiny New Year, I am sure thoughts of resolutions are running rampant through everyone’s mind. Starting a gym membership, a healthier diet and tightening the purse strings are usually at the top of the list.

While these are all good things, I would suggest you add completing a Financial Plan or revisiting the one you already have to that list. These plans play a crucial role in one’s financial journey, just like a road map directs you so too does your Financial Plan.

Ideally, you want to build a successful and manageable budget, eliminate debt, build an emergency fund, manage risk and save for the future, all while obtaining your personal financial goals along the way.

Even if you have not reached the point where an actual Financial Plan is warranted; it is always a good idea for everyone to look at their monthly budget, bank books, credit card statements and financial goals for the year ahead. The goal could be a vacation, a new car or even starting that emergency fund.

Start with a coffee and a table to work at, grab a pen and paper or a computer and spreadsheet – begin. It can be as primitive as a column of money that comes in (paycheck, rental income, pensions etc) and a column for money that goes out (rent or mortgage payment, food, car payment, insurance, debt repayment, savings etc.). It can be more in depth. There are plenty of online sites and forms that can assist with this.

Seeing what you have coming in and what you have going out can sometimes be a big eye opener, just in itself! How can you achieve your goal with what is in front of you? Once you are able to see what is left over or perhaps what the shortfall might be then it is time to make some decisions. Are there adjustments that can be made to trim the “outgoing” column or an opportunity to beef up the “incoming” side?

If you are at the point where a financial plan is needed; you will still need to look at your spending and savings. The number one question asked during the financial planning process is “can I retire?” and the response to that is what does your retirement look like? What does the month after you retire look like? I asked a client this once and he said “I want to learn how to play guitar” – great! What does that look like? I had envisioned him spending six months out of the year in Barcelona, Spain learning how to play the guitar. But he said no, there is a music shop down the street from my house – I want to spend three days a week taking lessons there! That will cost far less than what I had in mind.

The hardest question to ask and answer is, if you or your spouse were to suddenly pass away, what does the month after that event look like? Are there adequate savings, is insurance needed to manage the risk, are your wills and powers of attorney in place and updated? This is not meant to scare, but rather start the discussion.

Whether you are a student, a young family just starting out, a mature couple on the verge of retirement or you are already enjoying your leisure years, a financial plan can only help you. It is worth taking the time and the results may surprise you!

Happy New Year, love, laughter, good health and goodwill to all.

This article is supplied by Elizabeth O’Connor, an Investment Advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund). This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article.

Elizabeth O’Connor can be reached at 705-789-2100 or [email protected].

Whether you are looking for a full time, full service financial advisor or seeking expert financial advice as a second opinion, call Elizabeth. With offices in Haliburton, Huntsville and Bracebridge, Elizabeth works closely with clients in cottage country from the lakes and surrounding towns.

Elizabeth O’Connor is an Investment Advisor with RBC Dominion Securities, which is a member of the Canadian Investor Protection Fund. 705-789-2100