Written September 2013 by Marie DeLauretis
No doubt, for many individuals, financial planning, or just thinking about organizing your finances can be overwhelming. How does one begin? Indeed, where to begin? But financial planning does not have to be a daunting process. It should begin however, with a financial organizational strategy. If you think about it, it is essentially, the gathering of:
- All your investment statements containing information on any registered and non-registered investments you may hold such as stocks, bonds, mutual funds, GICs, and other term deposits.
- Statements/certificates/deeds of individual stock or bond holdings, and land or real estate property holdings
- A simple itemized list of collectable assets such as stamps, jewelry, coins, wines, antiques, and don’t forget the boat, trailer/camper, plane….
- Statement of your bank accounts such as chequing accounts, savings accounts and high interest rate savings accounts
- Debt statements of any kind such as mortgage statements, line of credit statements, HELOC statements, student loan statements, tax owing statements to name a few
- Canada Pension Plan (CPP) statements from the CPP department (to obtain a copy of your CPP statement, call 1-800-277-9914)
- Tax returns for the last two years (but don’t shred any tax info that is less than 7 years old – when in doubt of what tax document to purge, call the Canada Revenue Agency – ALWAYS SHRED SENSITIVE INFORMATION)
- Any notice of assessments for the last 2 years (which will include any Home Buyers Plan balances owing)
- Any and all active insurance policies or products sold by insurance companies such as segregated investments, annuity contracts and any contracts with Guaranteed Minimum Withdraw Benefits. Do not forget general insurance documents such as home insurance, vehicle insurance
You will also want to gather the following documents such as:
- Your estate and pre-estate documents better known as your Will, Enduring Power of Attorney and Personal Directive
- Any family contracts such as cohabitation agreement, martial contract, and separation agreement.
Gathering these important documents is much like the first steps of a plan to make your home or a room in your home clutter-free and more organized. These documents are the “keeper pile” for the time being, and are the documents that you would bring to a professionally trained financial planner in preparation of a comprehensive financial plan. Everything else can be thrown in the shred pile or the “not sure” pile (if in doubt, call your accountant or financial adviser to have a quick look at the documents you are not sure you should purge, or call the Canada Revenue Agency).
At this point, a goal gathering exercise is commenced. These goals can be financial or non-financial in nature and can be derived from the questions below:
- What do you want in life? Or what do you want to accomplish?
- What do you need your investments to do for you?
- Do you want to pay down debt quicker?
- Do you want to be in control of spending? Do you need a cash flow and/or debt management plan completed?
- Do you want or need to save more?
- Do you want to learn how to invest better or know how your money can work for you?
- When do you want to retire? What do you see yourself doing in retirement?
- How much income do you think you will need annually during retirement, therefore, how much would you need saved prior to retirement? (most people do not know this answer)
- Do you need guidance on preparing a retirement spending plan?
- Are you a squirrel, socking away all your savings and simply cannot spend your money for some deep seeded money mindset, and you want some guidance to change that accumulation mindset?
- Do you need to get your Estate in order? Are you sure your assets will be disposed of in the manner you wish? Who will look after your minor children or your dependents in the case of your death?
- Do you need life insurance or do you need an insurance review?
- In the event of your death, will your loved ones be able to cope financially or non-financially with the loss of your income and/or role in the family unit (do not ever discount the role of a stay-at-home parent – insurance is required on this individual!)
- Will you have enough financial resources to sustain your daily living activities in the case of disability or critical illness of yourself or another family member?
- What role does tax play in your life, do you want to know what tax savings strategies can be implemented to make your finances more tax efficient?
The above questions are for you to think about, they are questions a professionally trained financial advisor would ask you to extract actual goals from you, and eventually articulate these goals in a developed financial plan. Much like working with Rose to the Rescue to organize your home, office, or the chaos your life, you would work with a trained financial planner, such as a Certified Financial Planner to implement strategies to achieve your financial goals and make your finances run like a greased wheel. Thereafter, periodic monitoring and implementation of minor changes to your financial plan are needed as you go through your lifestyle changes.
Hope this helps!
This material is for information purposes only and should not be construed as legal or tax advice, nor be construed as specific financial advice to an individual reader’s personal situation. Every effort has been made to ensure its accuracy, but errors and omissions are possible. Individual circumstances may vary and specific financial, legal and tax advice from professional is always recommended. Future tax changes and market conditions may affect this information.