When it comes to your finances, having a plan is important. Whether you’re just starting out in your career, or you’ve been in the working world for years, it’s imperative you know how to handle your money. Money can’t buy happiness, but it can buy security. 

When we have our basic needs met, we don’t need to worry about survival. Therefore, we can focus on our pursuit of happiness. Once we understand the importance of money management in our day-to-day lives, we can review how money management looks for us.

Financial matters are highly individual, and there are many factors you need to take into account, such as your income, your monthly expenses, household/family size (this includes pets!), and your general lifestyle. The key to navigating these factors is made easier when you formulate a plan.

Let’s discuss why finances are best served by having a plan!

Importance of having a plan

Finances can be difficult and overwhelming, and sometimes emotionally draining. This is why taking the time to create a detailed and intentional plan will enable you to approach all aspects of life with confidence! 

Draw up a monthly and annual financial plan, perhaps with the aid of a professional, to reach your financial goals.

Create a budget

A big part of your financial plan should include creating a budget. Budgeting is incredibly important as it can reduce financial stress in your life. The biggest way this is achieved is by eliminating uncertainty. A budget combats uncertainty by allocating money to different areas of your life.

Small expenses are insidious, and often discounted until you are suddenly in a situation where you can’t afford something you need. When you sit down to budget your income, you know exactly where your money goes. Therefore, you can avoid this sadly common fate.

It’s easier to save with a budget!

Another benefit of budgeting is that it’s easier to save when we’ve already decided a portion of our income will be going to an emergency fund or a specific financial goal. This is also true for those who make their budgets with a partner. As humans, we’re not the best at self-enforced rules. But when others hold us accountable, it’s easier to adhere to them.

Budgeting enables you to look at your income and expenses and understand your spending. This eliminates the financial uncertainty many of us face during our day-to-day lives. Your personal relationships will reap the benefits from this certainty – a clear and agreed upon budget can eliminate a major source of distress among most couples.

Emergency Funds

After the many disruptions caused by COVID-19 on both a personal level and a societal level, we’ve seen just how important a buffer to keep us afloat is. An emergency fund should be a key element of your financial plan. It protects us from dire hardships in the event something outside of our control happens, such as illness or loss of employment. 

The common recommendation is to have a three-month buffer in your emergency fund that covers three months of expenses. Not everyone will be able to afford such a buffer. However, it’s important when creating your budget to save what you can. Something is better than nothing.

When creating your budget, ensure you can set aside an amount each month to add to your emergency fund.

Set yourself goals

Are you planning on buying a home? Going on a vacation? Or perhaps you’re saving for something else? When you create your financial plan, you can more easily see the path to your goal. 

Ensure you set yourself a deadline to meet a particular number, so each month you can see yourself get incrementally closer to your goal!

Consider investing

If you’re keen on including investments in your financial plan, consider the options that are available to you. If you’re investing in stocks, ensure you do your research and stay up-to-date on news and latest trends.

There are different Investment Savings Accounts available through your broker or advisor. You have the opportunity to grow and protect your cash while accessing your money when you need it. 

Another option is to invest in property. An investment property is real estate purchased with the intention of earning a return on the investment, whether that be through turning it into a rental or a future sale. This can be a short-term or a long-term endeavour, either way, it’s another excellent investment opportunity.

Speak with a mortgage broker to get a clearer picture of the best option for you. 

Whether you’re fixing a budget to gain clarity of your finances, planning for a specific goal in the near future, or seeking investments, remember, finances are best served with a plan!

If you’re looking for a professional to provide guidance, give me a call at (705) 333-4338 or get in touch with me here!

Customer Service Numbers:

CMHC: 1-800-668-2642
Genworth: 1-800-511-8888
Canada Guaranty: 1-866-414-9109

ATB: 1-800-332-8383
B2B: 1-800-263-8349
BMO: 1-877-895-3278
Bridgewater: 1-866-243-4301
CIBC: 1-800-465-2422
CMLS: 1-888-995-2657
Optimum: 1-866-441-3775
Equitable: 1-888-334-3313
Connect First: 403-736-4000
Chinook Financial: 403-934-3358
First Calgary Financial: 403-736-4000
First National: 1-888-488-0794
Haventree: 1-855-272-0051
Home Trust: 1-855-270-3630
HSBC: 1-888-310-4722
ICICI: 1-888-424-2422
Manulife: 1-877-765-2265
MCAP: 1-800-265-2624
Merix: 1-877-637-4911
Marathon: 1-855-503-6060
RBC: 1-866-809-5800
RFA: 1-877-416-7873
RMG: 1-866-809-5800
Scotiabank: 1-800-472-6842
Servus: 1-877-378-8728
Street Capital: 1-866-683-8090
TD: 1-866-222-3456