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Whatever your financial goals are – saving for your children’s education, retiring comfortably or leaving something for your loved ones – having a financial plan is important. With it, you can take better control of your finances and know you have a plan in place to help you achieve your goals.
DID YOU KNOW?
Most Canadians do not have a written financial plan.1
68%
No
28%
Yes
4%
Don't know
Think of a financial plan as your personal roadmap. It considers your current financial situation and future goals and should include an assessment of net worth (assets vs. liabilities), cashflow (i.e., income and spending), taxes, retirement planning, estate analysis, and in certain cases, insurance planning.
For Canadians who do have a written financial plan, the most common items included are a plan for retirement and financial goals.1
Let's take a closer look:
Financial goals
64%
Retirement plan
64%
Long-term investing plan
55%
Will and/or powers of attorney
46%
Cash flow outline
39%
Plan to manage or reduce taxes
29%
Insurance coverage
28%
Estate plan
23%
Plan to manage debt
15%
While everyone’s plan will be unique to their specific goals, a financial plan is designed to help answer three key questions:
- Where are you now financially?
- What would you like to achieve – both short and long term?
- How will you get there?
1. Provides a reality check
Not knowing where you stand financially can be extremely stressful. That’s why it’s essential to get an objective assessment of your overall financial health. A financial plan can help point you in the right direction financially and help you understand your spending and saving habits.
Interested in learning more about your income and expenses? The Scotiabank Money Finder calculator will help you determine if you have additional funds available to put towards your financial goals by comparing your income to your expenses.
2. Helps you set realistic goals
Everyone has financial goals, but many people don’t know if their goals are attainable. A financial plan will help you define realistic goals and outline a strategy for achieving them. Setting realistic goals will also go a long way toward minimizing unpleasant financial surprises.
3. Helps identify opportunities
A financial plan can help identify opportunities to save – or perhaps reduce one’s tax burden. For instance, depending on your life stage, topping up your RRSP or TFSA may be something to consider. A Scotiabank advisor can help you navigate both potential opportunities and challenges and recommend a course of action to help you save money, and earn money.
4. Plan for unexpected events and risks
A financial plan can help you identify certain risks and plan accordingly. For example, do you have a will or enough insurance to maintain your family’s standard of living in the event you pass away or become injured or disabled? Do you have an emergency fund established to cover job loss or major home repairs? A financial plan can help analyze your current situation in order to put in place appropriate safeguards.
5. Increases confidence and peace of mind
Canadians who have a financial plan report higher levels of confidence that they will achieve their investment goals than those who do not have a financial plan.
89%
of those who have a financial plan
are confident they will achieve their
investment goals.1
This article is provided for information purposes only. It is not to be relied upon as investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. References to any third party product or service, opinion or statement, or the use of any trade, firm or corporation name does not constitute endorsement, recommendation, or approval by The Bank of Nova Scotia of any of the products, services or opinions of the third party. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.
1 Scotia Global Asset Management Investor Sentiment Survey (Fall 2024).
