What should be in your financial plan?

You know you should have a financial plan, but you just haven’t gotten around to doing one. Or maybe you aren’t sure where to begin and what to include. Here are seven tips to get you started.

  1. Think about your values and desired lifestyle – “What are your priorities in life?” asks Chartered Accountant Robin Taub of Robin Taub Financial Coaching in Toronto. “Is it the security of owning a home? Higher education for your children? Independence? Annual vacations? Giving to charity? The goals of your financial plan should tie back to your values and the lifestyle you want to have.”

  2. Get a handle on your income and expenses – “Review what money is coming in and what is going out, as well as your fixed overheads and discretionary expenses,” says Chartered Accountant Phil Parkinson of London. “When you know this, you can set a budget.” You may also want to prepare a net worth statement, which is everything you own, minus all your debts.

  3. Include your entire financial picture – “Your financial plan should include your investment strategy and how you intend to minimize your taxes,” advises Taub. “It should also include retirement and estate planning.” A Chartered Accountant is knowledgeable in these areas and can provide important input and guidance as you develop your financial plan.

  4. Minimize your financial risk – “You need to plan for uncertain economic and employment times,” advises Parkinson. “What would you do if you were laid off and couldn’t find work for six months? If you found another job right away, what would you do with your severance?” Make sure you have adequate insurance to protect you and your family from the financial impact of damage to your home or vehicle, a serious accident, critical illness or premature death.

  5. Maximize your savings – “It can be hard to balance competing priorities, but try to take 10 per cent of your income each month and contribute it to a Registered Retirement Savings Plan,” says Taub. “You will get used to managing without that money, and the contribution is tax deductible.” Taub also suggests cutting costs by reducing your “latte factor” – the small amounts you spend on things like high-end coffee – which can add up quickly. It’s also important to keep your debt to a minimum.

  6. Review and update your plan regularly – “Your plan should be reasonable, measurable and attainable,” advises Parkinson. “Review it frequently and update it to reflect changing circumstances.” Major milestones that can affect your plan include buying a house, having children and retirement.

  7. Just do it – “Many people don’t get a handle on their financial situation until they have a crisis, such as divorce, death or job loss,” says Taub. “However, if you are proactive and do a comprehensive financial plan, you will feel more confident about achieving your goals. Knowing where you stand and where you are going is a good feeling.” Parkinson adds that willpower and follow-through are the keys to successful financial planning. “A plan is great, but if you don’t execute it, it’s meaningless.”

By The Institute of Chartered Accountants of Ontario


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Do you have a financial plan? Share your tips for how to start and maintain one in a Comment below.

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