Do Canadians Really Know What Financial Planning Is?
Since November is financial Literacy month, I thought I would take this opportunity to try and define what Financial Planning is and is not. When I ask clients what Financial Planning means to them, I get everything from a gaze of uncertainty to many different definitions.
In preparation for this blog I went online and googled the question “What is Financial Planning?” Here are some points I thought articulated the topic clearly.
What Is Financial Planning?
Financial Planning is a broad, generic term that can mean different things to different people. For some it is associated with financial products like GIC’s, mutual funds, stocks, bonds and life insurance.. For others it’s simply about putting a step by step action plan in place with anticipation of getting ahead financially.
If you Google “Financial Planning,” you will find a lot of attempts at explaining what Financial Planning is. Despite the fact that there is no shortage of information about what Financial Planning is or should be, it is still confusing to many people.
The word planning means looking into the future to make the future as predictable as possible. That’s all plans are - a road map or game plan or framework for the future. Add the word financial and a Financial Plan is simply a look into your financial future to ensure that you are implementing the right financial strategies to get ahead financially.
Financial Planning Facts
Financial Planning is NOT investing. You can have a Financial Plan without investing any money. Investing may be an action taken after a Financial Plan is prepared.
You DON’T need lots of money to participate in Financial Planning. The process of planning is creating specific actions relating to managing your money no matter how much you earn or have.
Financial Planning is TOO COMPLICATED and has too many components. Comprehensive Financial Planning can include everything from investment planning, retirement planning, education funding, debt management, budgeting, tax planning, insurance planning and estate planning. Financial Planning can also be as simple as taking one of those components and developing s strategy to make improvements. Planning one topic at a time is referred to as modular planning and a good way to start for those feeling overwhelmed.
Engaging the services of a Certified Financial Planner is TOO EXPENSIVE. There are many CFP professionals who offer Financial Planning services at no additional cost to you if you agree to purchase their investment or insurance products. Other CFP professionals offer advice on a fee for service basis with no association with the sale of product. If a CFP Professional can help you improve your financial position, the costs you pay should be considered a small investment in enhancing the power of your money and quality of life.
Financial Planning Is Simple, Not Easy
As simple as it may be, the challenge is that it’s not easy. Why? Because it takes work, effort, awareness, discipline and change. If you have not been able to achieve this on your own then the first step is to seek out a CFP Professional who can help you get started. He or she should be willing to help you move forward at a level and pace comfortable for you.