Essential Guide to Financial Planning
Crafting a financial plan is a strategic approach to aligning your monetary affairs with your life’s ambitions, ventures, and dreams. To kickstart your financial journey, we offer the following guidance!
Per the Financial Consumer Agency of Canada, a well-structured budget or financial plan is instrumental in saving for future objectives or bracing for unforeseen costs. Yet, a staggering 51% of Canadians lack a financial plan. Fortunately, it’s always the perfect time to establish sound financial practices and refine (or initiate) your financial plan!
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Distinguishing Financial and Investment Plans
Understanding the distinction between a financial plan and an investment plan is crucial. A comprehensive financial plan encompasses more than you might anticipate, including all mechanisms and services that safeguard your assets—like insurance and wills—alongside your saving tactics.
Conversely, an investment plan is solely concerned with your saving strategies, such as RRSPs, TFSAs, RESPs, and other investment forms.
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Initiating Financial Planning
The initial step in financial planning is to document your plan. By setting short, medium, and long-term objectives, you can devise optimal financial strategies to achieve them.

Short-term goals might include:
— Establishing an emergency fund equivalent to three months of living expenses, readily accessible and unaffected by market fluctuations.
— Opening a TFSA for projects necessitating immediate cash availability.
— Fulfilling present financial commitments.
— Attaining a debt-free status.
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Medium- and long-term aspirations could be:
— Formulating or revising a retirement strategy.
— Allocating funds for your descendants’ education via RESPs.
— Securing your savings with appropriate insurance.
— Commencing estate planning considerations.

Setting Your Financial Targets
Employ the SMART framework to define your financial objectives: Specific, Measurable, Achievable, Realistic, and Time-bound.
— Specific: Ensure the goal has a clear and observable outcome.
— Measurable: Select a quantifiable target.
— Achievable: Aim for a challenging yet attainable goal.
— Realistic: Verify the availability of necessary resources.
— Time-bound: Assign a deadline for goal attainment.

Inclusions for Your Financial Plan
‍Beyond goals, your plan should consider insurance and estate planning requirements. Contemplate necessary insurance products:
— Life insurance
— Health and disability coverage
— Critical illness insurance
— Property insurance
— Vehicle insurance
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Reflect on estate planning to ensure smooth transitions for your kin in unforeseen circumstances. Considerations include:
— Defining objectives (beneficiaries, final wishes, etc.)
— Compiling essential documents and drafting an estate summary.
— Crafting a will with professional assistance.
— Appointing beneficiaries.
— Streamlining tax strategies.
— Prearranging funeral details.
— Establishing directives for end-of-life care.
— Selecting a legal representative.
— Organizing all pertinent legal paperwork.
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