What is a financial plan?

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.

While everyone’s particular plan will be different, a financial plan is designed to help answer three key questions:

  • Where are you now financially?
  • Where would you like to go?
  • And how will you get there?

What is comprehensive planning?

In a comprehensive plan, “the main financial advisor has provided financial planning for major life goals and events, or at least three of the planning components: household budgeting, tax, retirement, estate planning, investing, debt or risk management.”*

Want to get on top of your investment and savings planning?

5 key benefits to starting your financial plan

1. Provides a much-needed reality check

Not knowing where you stand financially, or ignoring certain issues like debt, can be extremely stressful. That’s why it’s essential to get an objective assessment of your overall financial health. A financial plan can determine if you’re living beyond your means and then help you to understand where all your money goes. Interested in learning more about your income and expenses?

The Scotiabank Money Finder calculator is a great tool to help track your spending.

2. Helps you set realistic goals

Everyone has financial goals, but many people don’t know if their goals are realistic. A financial plan will help you define realistic goals and outline a strategy for achieving them. Setting realistic goals often involves compromises; however, having realistic and attainable goals will 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 financial advisor can help you navigate potential issues and recommend a course of action to help you save money and earn money.

4. Plans 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 life in the event of your death or disability? Is there an emergency fund established to cover job loss or major home repairs? A financial plan can help analyze your current situation in order to provide appropriate safeguards.

5. Increases confidence and peace of mind

According to a Financial Planning Standards Council study, which included about 15,000 Canadians, the study revealed that Canadians who engage in comprehensive financial planning report significantly higher levels of financial and emotional well-being than those who do no planning or limited planning.*

Talk to experts

Whether you want to retire comfortably, make a major purchase or save for your children’s education– having your own financial plan is important. With it, you can take better control of your finances and know you’re on your way to achieving your goals.

At Scotiabank, with our knowledgeable advisors, financial-planning tools and range of investment options to choose from, we can help you create a financial plan that’s right for you.