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Financial Planning in Your 20s & 30s

Author:   |  Published: September 21, 2012  |  Leave your thoughts

Have you ever wondered why you should think about an RRSP, TFSA or insurance? Especially given that you have to pay for student loans, car loans, travelling expenses, partying, shoes, as well as saving for a down payment on a downtown condo or house?

Without a good seed and proper care, a healthy plant will not bloom and you won’t enjoy its fruits. And if you are in your 20s or early 30s, you are in your seeding period. However, you will not have to make sacrifices in your lifestyle to build a financial plan. With balance and proper planning, you can spend the rest of your life comfortably with proper financial security.

You may have heard about basic wealth and risk management in your personal finance courses. The accepted wisdom is that you should set aside 10% of your income towards savings and live within your means with the remaining 90%. You may also believe that textbook lessons are different from the real world. This is not entirely true. There are many planning concepts and proven strategies tailored for every person’s unique life stage and situation.

I help many young people – recent graduates and young professionals alike – to change their financial life picture with these strategies. And I could help you too with our team’s strictly confidential and no obligation consulting to build your Money For Life – Sun Life Financial Program.

Growing and accumulating wealth has much to do with planning ahead. A financial professional may either develop a financial plan, implement a plan or do both. In 2003, the Financial Planners Standards Council (FPSC) conducted a survey and found that 39% of Canadians used a financial professional to help manage and structure their finances. In the same study, the percentage of young adults 18 – 29 using a financial professional doubled from 8% to 16%.

How about you? Are you using the right professional?

What is financial planning?

Aren’t we all looking for some degree of financial security today and for our future? Isn’t this why we save and invest our money, buy insurance, and buy items of value? All of these measures are usually taken in an attempt to increase our wealth and give us security.

However, most of us do not know exactly how much is necessary to meet our objectives and we worry whether some twist of fate will cause us to lose much of what we have, or cause our families to suffer financially.

The fact is, in many cases, failure to achieve some measure of financial security is basically a result of poor money management, which is something that is avoidable with sound financial and estate planning.

Here are the steps to follow:

• Prepare a net worth statement: This is your starting point in building your financial future.

• Prepare a monthly cash flow statement: This helps identify what resources you have to help build your financial plan.

• Assess your risk management program: Do you have sufficient financial protection against the loss of your property, income or life? I can help make sure you have the coverage you want.

• Plan how you’ll accumulate future capital: Once your cash flow and risk management are on target, and you’ve carefully considered your goals and your tolerance for investment risk, you can plan your investment portfolio. I can help design a strategy that meets your own unique needs and objectives.

• Plan for your retirement: It’s important to consider the lifestyle you want, and plan for the income you’ll need. I can help you develop these plans.

• Plan for your heirs: Estate planning is important-with a sound plan in place, you can help ensure that your assets will pass to your chosen heirs in a tax-effective manner and in accordance with your wishes.

Comprehensive planning

A comprehensive financial plan should take everything into account to provide you with a clear picture of where you are now and where you want to be in the future. It looks at short-term and long-term financial goals to help you prepare for the kind of retirement you deserve. By following the plan you establish, and monitoring and updating it on a regular basis, your retirement can be as financially secure as it is personally satisfying.

Your individual needs

Not everyone has the same needs and wants in life. That’s why a financial plan should fit your lifestyle. Only you know for sure where you would like to be financially-both now and in your retirement years. It’s up to you to make the decisions and drive your plan, but I’ll certainly be here to help guide you along the way. Contact me to help you develop a financial plan.