You’re young. You’re a professional. You’ve started making money.
The future may seem far off. But it’s coming.
Do your future self a favour now: have a financial plan. You’ll be thankful you did.
Your financial plan should examine these things:
Your Cash Flow
- Regular income streams (wages, childcare benefits, etc.)
- Regular expenses or outflows (savings, rent, paying debt, etc.)
Your Retirement Planning
- RRSP contributions (retirement savings – yes, this early!)
- Lifestyle choices (how do you want to live in your retirement ? how about now?)
- Age, earnings expectations (are you starting saving in your 20s? 30s? how much can you afford to put away?)
Your Investment Portfolio
- Time horizon (some investments for short term, some medium, some long)
- Risk tolerance (can you tolerate a large drop in a volatile stock?)
- Diversification (are you invested in one sector?)
- Purpose (which investments are serving which ends?)
Your Insurance Planning
- Life (do you have the life insurance that fits your situation?)
- Health (are you covered for your health needs?)
- Disability (your ability to earn income is your largest asset – is your largest asset insured?)
- Critical Illness, etc. (you need to prepare for the unexpected)
Your Tax Planning
- Minimizing tax burden (using tax-deferred and tax free accounts, etc.)
- Maximizing savings and income (keep more of your money)
- Maximizing deductions you’re entitled to (education credits)
Your Education Planning
- Planning for your education (maybe you want to go back to school)
- Paying student loans (a big challenge after graduating)
- Planning for your child’s education (never too early)
Your Estate Planning
- Wealth transfer (yes, it’s for later in life – but prepare now)
- Having a will (who gets what?)
- Includes tax considerations (keep more of your money)
- Includes insurance considerations (protect yourself and your assets)
You might feel like it’s too early to plan for the future. It’s not!
Your future self thanks you in advance.