What is a financial plan?

Let’s start off with the basics. You might have heard “you need a financial plan” from friends and family, but what does that mean? A financial plan is a document outlining an individual’s current money situation. It also outlines their goals for both the long and short term. A good financial plan outlines the strategies to achieve those goals, and provides strategies for managing unforeseen circumstances that may arise in the pursuit of these goals.

How is a financial plan different from a budget?

Confusing a budget with a financial plan is a common mistake. A budget is a simple way to account for the inflows and outflows of your financial situation. It’s a short term look at your income vs your expenses. On the other hand, a financial plan takes it a few steps further and helps align the inflows and outflows of cash with your financial goals while assigning where any surplus should be allocated.

An idea without a plan is just a wish.

Why is a financial plan important?

A financial plan is important and provides a structured plan for achieving your goals. After-all, an idea without a plan is just a wish. A financial plan keeps you on the path that is required to achieve your long-term goals, potentially over decades. Plans can adjust and change as required, but the overarching end goal stays relatively stable. 

Various challenges along the way to your goals will come up. That’s why it’s so important to have a financial plan that allows you to maintain focus and perspective on the purpose of the money you’re earning. 

Your earnings also need to be saved for a later date when you are unwilling or unable to work. Without a financial plan, the income you work countless hours for may not be allocated efficiently, and you may be required to work much longer than necessary. 

What elements go into a financial plan?

There are three main components of a financial plan. First the financial constraints you are currently under. This can include your current income and life’s necessities that are non-negotiable. Second, your current lifestyle needs and how you want to spend your money. The final input is your goals and desires for the future. This might be your desire to retire at a certain age, purchase a hobby farm, or sail around the world. Whatever your goals are, the most important thing is what you want as an individual. 

There are no right answers for the inputs into your financial plan, but there are more or less efficient ways to achieve those goals. Making a plan allows you to consider the numerous financial constraints such as tax, growth, liquidity, risk, and make choices considering all of them together. 

A Unity Group Advisor can help streamline the process of creating a plan, and take the complicated requirements of coordination off your plate.

How can a Unity Group Advisor help with your financial plan?

A Unity Group Advisor can help streamline the process of creating a plan, and take the complicated requirements of coordination off your plate. We will help you get your goals down to a simple starting place, often this means focusing on one single number. 

You are capable of saving a given amount each month. We can help you better understand what that number may be, and help you choose how to best allocate that number to the various financial products available in Canada today. 

Rather than specialize in one institution’s products like your guy at the bank, we dedicate our time to helping our clients save with as little risk as possible, paying as little tax as possible, and earning the highest return possible while aligning with your risk tolerance. We help clients navigate the ever changing financial landscape and ensure that your overall goals stay on pace across the short and long term goals of your life.