CUMBERLAND AND DISTRICT CREDIT UNION

PEOPLE HELPING PEOPLE

FINANCIAL PLANNING FOR THE FUTURE

FINANCIAL PLANNING WITH INTEGRITY

Looking for knowledgeable and impartial information on financial planning? Sound advice is available free of charge from the Credit Union General Manager anytime. Call 336-2272 for a free consultation.

We do however have several ideas you might want to consider before meeting with anyone and these are broken out below. Most of our ideas are drawn from the Canadian Institute of Financial Planning and our many years of experience. We would also like to point out that most of our financial advice would apply to an RRSP portfolio or any other group of financial investments.

Now down to business-What exactly is PERSONAL FINANCIAL PLANNING and how can it affect my life!!

"PERSONAL FINANCIL PLANNING IS THE PROCESS OF EXAMINING YOUR OWN FINANCIAL AND PERSONAL SITUATION, DEFINING REALISTIC SHORT TERM AND LONG TERM FINANCIAL OBJECTIVES AND DEVELOPING AND IMPLEMENTING STRATEGIES FOR REACHING THOSE OBJECTIVES"

The first step is understanding the five basic steps to Financial Planning Process:

1. ESTABLISH FINANCIAL OBJECTIVES
2. GATHER, PROCESS AND ANALYZE RELEVANT INFORMATION
3. DEVELOP A FINANCIAL PLAN
4. IMPLEMENT YOUR PLAN
5. MONITOR THE PLAN AND MAKE CHANGES AS NECESSARY
ESTABLISH FINANCIAL OBJECTIVES
As the Cat said to Alice, if you do not know where you are going, how will you know when you get there. The same applies to Financial Planning. Objectives can be "short term" such as ensuring the financial security of the family in the event of your death, or maintaining your current standard of living should there be a lay-off in the family. Long Term objectives include moving to a larger home or one in a more desirable location, early retirement or Capital Accumulation for a second home or cottage at the lake. There is an endless list of objectives, the key is to develop your list and then set the priorities.
GATHER, PROCESS AND ANALYZE RELEVANT INFORMATION
Before you can develop your plan to realise your objectives, you must have a very clear picture of your current financial situation. A list should be compiled of all your assets, liabilities( loans, mortgages, and other debts. ) income sources and all payment commitments. The Income Tax Department requires you to keep records for a least 5 years and these can be a good source of information for your planning. Once you have gathered all your information you can begin to develop your plan. One of the elements of your self analysis will be a determination of your tolerance of investment risk. This is dificult to do and may require the assistance of a trained individual.
DEVELOP A FINANCIAL PLAN
When all the financial information has been collected and reviewed and your objectives examined carefully to ensure they are realistic, your plan can begin to take shape. It will include such items as a planned monthly contribution to an RRSP ( be it an EQUITY RRSP or DEMAND ACCOUNT RRSP), to increasing your life insurance coverage on yourself ( or Spouse ). Remember to make the benificiary your spouse or other family member in order to receive the insurance proceeds right away rather than get slowed down in the Probate. In order to add a level of decipline to your plan, it is a good idea to put your plan on a time frame with specific targets. And lastly your plan should include some alternatives to the specific strategies as a back up to the overall plan.
IMPLEMENT YOUR PLAN
This part of the program may seem obvious but it is very surprising the number of people who spend a great deal of time and money developing a workable plan, only to fail to follow through with it. Some plans can be put in place in stages, however it should be kept in mind inflation and the effects of interest ( both borrowed and earned interest ) are greatly affected by time. For example making daily payments on your mortgage as apposed to monthly payments can knock off as much as 6 years on your mortgage. In addition the assumptions you used when developing your plan can change very quickly in some cases if the implementation of a good plan is delayed.
MONITOR THE PLAN AND MAKE CHANGES AS NECESSARY
Monitoring your financial plan is as important as developing it. The world is constantly changing and your financial situation changes along with it. Your plan should be reviewed no less than once every 5 years and whenever there is a major change in your life. These changes can be anything from getting married to having children, or buying a house. These changes can also include receiving funds through an inheritence ( or Lottery !!!).


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