For many Canadians, financial planning can be daunting. Not only that, but it can be hard to keep track of everything, with there being so many different aspects of financial planning that are all equally important. However, it’s not impossible. The best way to do this is through creating a holistic financial plan. When creating a holistic financial plan, you are trying to look at your life as a whole rather than planning for one specific goal or outcome. While there are financial planners who are called “holistic financial planners,” you don’t have to necessarily see them specifically in order to plan holistically and harmoniously. Rather, treat this more like a mindset that you go into financial planning with to help you stay on track.
The Basics
Take a top-down approach to this by looking at the end of your life and then working your way backwards. Doing it this way means that you are not only less likely to forget things, but also helps to put your goals and plans into perspective. You can see what you’re potentially missing, and then hopefully move your money around to work better for you.
To do this, simply start by writing down what your life goals are. This may take a while, but you’ll want to make sure that you account for everything. These goals can include things like, where you’d like to be in the next five years, fifteen years, twenty-five years, and so on. You’ll also want to identify what it is that you spend your money on and what you think it’s best to prioritize in regard to your finances. The reason why we start from top down is that most people have a picture of what they want their retirement to look like. Flesh these dreams out, and then calculate how much each of your plans are going to cost.
Next, you’ll want to determine whether or not your current spending habits and lifestyle will continue to support you moving forward and allow you to achieve your goals. This is the point where you’ll start to see which of your goals is realistic, and which ones aren’t. So, you’ll want to understand what your current income is and how your income is supporting you. Are you living paycheque-to-paycheque, are you able to put some of your money into savings, do you have any investments, and how are they performing? These are all questions that you should know the answer to. You’ll also want to know if you have enough of an emergency fund in case something were to happen like a job loss, sudden disability, or an environmental crisis causing large losses like the destruction of your house.
Now, create a forecast. How much are you making in a month, and how much of that money are you spending? Can you afford to build up your savings and investments, and ensure that this includes any government grants or subsidies that you are eligible for. After this, you’ll want to look into what your next steps to achieving your goals are. Write down an actual plan. What are the steps that you need to take in order to be able to realise your goals? Do you have debts you need to pay off? Do you need to move to a different area in order to lower your rent, or do you just need to get better about how you spend your money? This part will involve the other people who are helping you with your finances and discussing next steps with them so you can achieve your goals.
A Deeper Dive
While this is considered to be a big picture plan, it’s also important to understand the different ways in which you’ll use your money throughout your life. This includes daily and monthly expenses, credit and debt management, mortgages, insurance, and income taxes and contributions. In addition, you’ll want to learn about how your money can work for you in different ways, such as, your income, saving accounts, your investments, and any plans you may be a part of regarding your retirement and pension.
When creating this more detailed breakdown, you should already have a bit of an overview of what your finances look like, so that this is more of a log in an Excel spreadsheet than anything more daunting than that.
Overall, keep in mind that while this may seem like a lot, you can take this one step at a time. You may want to include a financial advisor in your planning to help you keep everything straight, and you can go to the government of Canada website to learn about the basics of finances so you can get your information from an unbiased source.
Lily Frances | Contributing Writer
