By The Globe and Mail Custom Content Group
Many people think about investments or retirement when they think about financial planning – but the reality is that it is a process that impacts every aspect of life, from health and home to vacations and emotional well-being. Put simply, it’s the single most effective way to plan for the life you want.
To achieve your goals, it is essential to “begin with the end in mind,” says Lee Bennett, senior vice president, TD Wealth Financial Planning. “Many people have a rough idea of where they’d like to go in life, but most haven’t taken the time to write down specific goals. Defining your personal and financial goals is an important first step because it will help you understand where you see yourself in the future. You can then build a roadmap – the financial plan – to help get you there.”
In the planning process, short-term goals such as taking a vacation, buying a big-ticket item or paying down debt are just as important as longer term goals such as buying a home or putting money aside for retirement. “People sometimes forget about immediate goals,” adds Ms. Bennett. “For example, you may not plan or save for things like treating yourself to a fun night out or enrolling your child in extracurricular activities.”
To create an effective foundation for your financial plan, she suggests writing down each goal in order of importance and then assigning a time frame. “A good financial planner will work with you to help define what matters most to you and your family. Instead of just discussing how much money you make and how much you spend each month, they will dig deeper to really understand your personal and professional goals.”
Is it time to find a financial planner who can help you achieve your dreams? Lee Bennett, senior vice president at TD Wealth Financial Planning, offers these tips:
- Find a planner who’s a good listener and who wants to understand you as a person rather than just a balance sheet.
- Make sure your planner helps you to identify both your short-term and long-term goals.
- Ask for an honest assessment of what it will take to achieve your goals.
- Insist on a personalized plan to help you meet your specific needs instead of a “one size fits all” solution.
- Choose a planner who has the tools to review the progress of your financial plan against your personal goals, rather than just focusing on investment returns.
- Look for someone you feel comfortable with and you welcome as an important person in your life.
Your financial planner will also help you optimize tax management, charitable giving and asset protection strategies, she explains. “Together, you can then develop a tailored financial roadmap.”
A financial planner should be able to have an open, honest discussion with you about what really means the most to you and your family, Ms. Bennett stresses. “It means asking questions to learn where you want to be in five, 10 or even 20 years, not just talking dollars and cents. They’ll want to understand how you measure success and what you’d most regret if you weren’t able to do it.”
Reconnecting with your financial planner each year as well as whenever you experience a major life change will ensure that the plan evolves along with you and your family. If your family situation changes – you get married or have a baby, for instance – or if you are planning to make a major purchase, it’s time to review your goals and discuss whether or not your financial plan needs to be adjusted, notes Ms. Bennett.
“Life is unpredictable, which is why you can never ‘set and forget’ your financial plan. If you think of it like checking a map on a road trip to adjust your route when you run into road closures or decide to take a side trip, your plan will help you deal with whatever life throws at you.”
Finding a planner you have a comfortable rapport with is essential to the kind of value-based conversations on which an effective financial plan is built, says Ms. Bennett. “Good financial planners are open, honest and easy to talk to. They are genuinely interested in helping you define and achieve your goals. ”