Planning for Your Financial Future

Planning for Your Financial Future by Nicole Blackburn, CUA Investment Advisor
At CUA, we talk to a lot of people about financial goals — the big-picture objectives you set for how you'll save and spend money. What are yours? Do you want to make a major purchase, like a home or a car? Perhaps you want to pay for a child’s future education, or you are focused on your retirement. Whatever your goals are, have you considered the short or long-term steps to achieving them? This is where financial planning comes into play.

Creating a financial plan

Once you’ve filled in the blank, “I want to achieve _____________”, it’s time to look at your budget. If you don’t already have a budget, start by listing all your expected income and expenses. This will help determine what you can currently afford and where you may need to re-allocate funds. For example, if your goal is to save for your child’s post-secondary education, but you do not have enough room in your budget to contribute to their RESP, you may want to work on your budget to make this more of a priority. A Financial Advisor is an excellent resource to help make these decisions.

Not all assets are created equally

There are many factors that go into achieving your goals, including your budget. Your assets and net worth are also important. Your net worth is calculated by adding up your assets (things you own with monetary value) and subtracting your liabilities (debts). This is relevant depending on how you hope to achieve your goals.

While the process of financial planning may look similar from one person to the next, your plan will be unique to you. For example, retirement is one of the most common financial goals that I help people plan for, but there are many different solutions that work for different circumstances. For instance, in the following scenarios two people could have the same net worth but one may not have the assets required to retire.

Scenario One

If your goal is to retire in the home that you currently live in worth $300,000, it may be wise to put extra money into investments and RRSPs to help fund your retirement, rather than rushing to pay your home off. That way, once your home is eventually paid off, you will already have a healthy retirement fund that is working for you. If you decide down the road to also sell your home, that sale could contribute to an even more comfortable retirement.
Scenario Two

If your goal is to sell your $300,000 home and downsize in retirement, consider working hard to pay your mortgage down quickly. After your home is paid off, you will have a $300,000 asset waiting to be sold and then you can start putting additional money into investments. If you decide not to sell your home, and it’s your biggest asset, you may not have the money to fund a comfortable retirement.
In the above two scenarios, you can see the difference in how your assets work. While your home may be worth $300,000 debt free in retirement, if you aren’t planning to sell it, then it shouldn’t factor heavily into your retirement plan. This is only one example of how everyone’s circumstances are unique. To gain a good understanding of your assets and how they can work for you, talk to a Financial Advisor.

Protect yourself

We often use the word asset to reference to what you own: a house, a car, your investments and more, but your ability to earn an income is the largest and most important asset you have. If this suddenly changes and you are no longer able to earn an income, how will this impact your ability to live and reach your goals? That’s one of the many reasons to purchase insurance, for yourself and on your loans. It can help prevent major life changes from making your goals unattainable. Planning for the unexpected is an important part of being prepared for the future.

What’s next?

Wealth is different for everybody, so whether you have $50, $5,000 or $500,000, financial planning will help you make sure you have the money you need, where and when you need it so that you can achieve your goals. Have questions or want to get started? We’re here to help. Call us at 902.492.6500.


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