What’s Your Plan B? How financial planning can help you prepare for the unexpected

Kevin Cork, CFP

Kevin Cork, CFP

Too many Canadians are living on the financial brink, according to a recent nationwide survey conducted for the Financial Planning Standards Council (FPSC).

One in five said they could sustain themselves for no more than a week before going into debt if they lost their job or other main source of income, and 40% said they would last only four weeks. Nearly three quarters of respondents said they worried about money at least once a week.

The findings didn’t surprise Kevin Cork, CFP®, president of The Absolute Group, a financial planning and advisory firm based in Calgary, and author of The Money Book: A Survival Strategy for Canadians Under 35 and The Investment Book.

He believes that one of the biggest mistakes many Canadians make is to ignore financial planning until they’re faced with a pressing personal issue – and then they often have fewer options than if they’d started earlier.

Moving past procrastination

“Financial planning can be a bit like flossing after every meal or doing 30 sit-ups before bed,” says Kevin. “You know you should do it, but until you’re faced with a sudden event like job loss, sickness or the death of a family member, it simply doesn’t happen. Then you end up scrambling.”

Getting people to recognize the need for qualified, lifelong financial planning and to act on it should start as early as possible―in high school or college, he adds.

“Human nature is the big challenge. We tend to take care of the immediate problems that we face at any given moment, but sometimes neglect critically important long-term issues. When I sit down with clients, I tell them that they need to think about their finances at least as often as they think about their shoes,” Kevin says. “If you’re buying shoes two or three times a year, you might be going to the mall for a couple of hours to do comparison shopping, going back and forth. Put the same time and effort into keeping your finances in order.” 

Getting the right help is plan A

So how to plan for those awkward, uncomfortable issues you might prefer to ignore, like how you’d cope with job loss, divorce, or a death in the family? A Certified Financial Planner® professional can help you develop strategies to deal with those “just in case” scenarios, easing your financial stress and giving you some financial breathing room if unfortunate events should happen.

However, that doesn’t mean you have to confront all the worst-case scenarios at once. The important thing is to find a qualified financial planner you’re comfortable with and get the process going. That can be as simple as setting financial goals like starting a monthly savings target and opening a savings account.

“When people start to grasp the basics, its eases them into the idea that financial planning does not need to be a huge, complicated process that you only do for retirement, or that you only need a financial plan if you’re wealthy,” says Kevin. “Part of a CFP professional’s role is to help ensure that a client’s money is being allocated and used as efficiently as possible, so that they get the most out of whatever financial resources they have.”

Kevin believes starting as early as you can is the most important aspect of financial planning―and the best way to be as prepared as possible for unforeseen financial crises.

“Young people who may be newly married, starting a family or buying a home have no idea what the future will hold,” he says. “They often don’t have much money and decide to put off financial planning, but their biggest advantage is that they have time to accumulate wealth and develop a plan to use it efficiently. When I talk to 20-year olds, I urge them to get started, even if it’s just putting $100 a month into an RSP at the bank.”

“I tell them that time is a gift and they need to take advantage of it. They can’t get it back later. And the effort they put into planning now will help provide a much smoother path through life.”

To find a qualified financial planner to help you put a financial plan in place, use our Find Your Planner tool.

For more information, read A solid financial plan boosts financial and emotional well-being, Finding your financial planner and 5 tips to fight anxiety about money.