This is the single most important step to financial success

Let me paint a picture and you can tell me if this sounds like your situation.

You opened your first bank account when you were young at the branch where your parents did their banking. As a student, you saved a little money working part-time jobs but after graduating, you mainly accumulated debt (school loans, car loan, mortgage, etc.). Eventually, you began your career and started saving. As you saved or came into money, you found somewhere to invest it. But you didn’t give it a whole lot of thought because the amounts weren’t all that large to start.

Technically there’s someone at your bank who is your “advisor” but you never hear from them unless you call them. Worse yet, there always seems to be a new person in the role every time you visit.

You’re finally making some real money now but your financial strategy is a bit of a Frankenstein; a mish-mash of small decisions you made over many years without a master plan.

Does that sound reasonably close to describing you?

If so, you’re not alone. Most people I speak to aren’t even sure what a financial plan is. That’s because many financial advisors don’t offer financial planning. It requires specialized tools and considerable training, time, and effort.

So let’s get you up to speed. A financial plan is a document that details a specific strategy for your finances that will help you get from where you are now to where you want to be in the future. It will also include detailed financial forecasts that show how your money will grow (or decline) year by year into the future assuming you pursue that strategy.

It can tell you things like whether it’s better to use a TFSA or an RRSP or how much you’ll need to save in order to retire at 55. It can also turn vague concepts into tangible goals. For instance, it can tell you that if you save an additional $500/month starting now, you’ll have an extra $600,000 at retirement. Furthermore, that $600,000 will allow you to draw an extra $20,000 per year from your investments in retirement without running out of money.




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When we sit down with clients we start by tallying their assets, liabilities, income, and expenses. We’ll then spend a lot of time getting to know their personal circumstances and how they might affect your finances. Maybe you’ve been laid off work, have a sibling who is disabled that you help to care for, owe child support for your children from a previous marriage, etc.

We then spend a lot of time getting you to articulate your future goals. Most people can’t do that until we walk through the exercise with them. Don’t believe me? Think about it right now. What are your specific short and long-term financial goals? Like most of us, you probably just have a vague sense that you need to grow your investments as much as possible.

But that’s not a helpful goal. It’s not specific enough. It’s like saying your goal is to be successful. Well ya, sure. But how will you go about achieving it if you haven’t defined what success means to you?

A goal needs to be specific so that you can reverse engineer how to get there. For instance, if your dream is to visit every country in the world vs becoming the world’s leading authority on Botany, your strategy to achieving those goals will be very different. The same is true for your finances.

That’s why we spend a lot of time discussing our clients’ fears, hopes, and dreams with them. We encourage them to dream big. This gets the ideas flowing.

At first, many people are afraid to verbalize their biggest dreams. Often, they think it sounds silly or impossible. That may be true, but there’s no surer way to not get there than to convince yourself it isn’t possible before you’ve even tried.

After we’ve pinpointed a client’s specific financial goals (e.g. take a year off work to travel the world, buy a boat, start their own foundation, etc) then we make some projections.

In order to do this, we make some assumptions about factors that are highly uncertain (things like rates of return, tax rates, what your pension will be worth, what age you plan to retire, etc). We can’t know any of these variables with certainty but we make some educated guesses.

We then give you concrete recommendations for where and how to invest your savings. That might include investing in an RRSP instead of a TFSA or vice versa, consolidating debt, taking out life insurance, increasing your work pension contributions, etc. We also detail exactly how we’ll go about managing your investments.

Finally, using some incredibly powerful software, we crunch the numbers. We show you projections into the future that detail whether you’ll be able to achieve your goals or not. If not, we’ll tell you what you’ll need to do differently to reach those goals.

Over time, as your circumstances change, we update the plan and recalibrate it to make sure we stay on track. If you start falling behind, you’ll know very quickly and be able to take action to catch up. Without a financial plan, you’re flying blind and just hoping that you’re on track.

Now, knowing all that, who do you think is more likely to reach their financial goals? Someone with a documented game-plan or someone just winging it?

There are many factors that go into achieving your financial goals such as low fees, earning a better return on your investments, pay less tax, etc. But the single best thing you can do to improve your odds of achieving your goals is putting proper game-plan in place.

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About the Author




David O’Leary is Founder & Principal of Kind Wealth and host of The Impact Investing Podcast. He is the former Managing Director of Origin Capital; a provider of high-impact investments that provide an opportunity for the world’s most vulnerable people in the hardest to reach places. Read Dave’s bio or connect with him on LinkedIn.

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