Pattie Lovett-Reid

Chief Financial Commentator, CTV

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Everyone deserves a financial plan – regardless of their age or financial status.

My husband and I have updated our plan on a yearly basis since we created our first one the year we were married – and we are about to celebrate 25 years. Sure it has evolved, and hasn’t always gone according to “plan,” but having that roadmap has always given us focus.

People have often said to me: “I don’t have enough money to create a plan.”  My response has always been: “Don’t self-eliminate.”  A financial plan is simply a roadmap to a financial destination.

The beauty of creating a personal financial plan is it’s yours and it highlights what really matters to you. You have to own your plan because at the end of the day, no will care more about your financial future than you.

Broadly speaking, here are a few things to consider when creating your financial plan:

• Be very clear on how you are spending your money. We all know how much money we have coming in; however, rarely do we really know what we are spending it on.
• Set some financial goals that mean something to you. Something you can get excited about that will alter your spending habits.
• Prepare for the unexpected by having insurance. Insurance is best if never used and invaluable if you need it.
• Beware of credit card abuse. Time and compounding works well if you are saving money (earning income on income) and destroys your financial plan if you owe money.
• Start saving. Tuck money away systematically by paying yourself first.
• Build an investment portfolio. Systematic investing takes guess work out of trying to time the market.
• Create a will. This will allow you to choose how your assets are distributed versus the government stepping in and deciding.
• Update your plan. Income levels change, family dynamics change, tax laws change, etc. Review the plan at least annually.

I’ve seen households destroyed financially by spending more than they earn, not having an emergency fund, and believing life will never throw them a curveball – but sadly, it will.

Ideally, you should have three-to-six months’ worth of living expenses tucked aside for “what-if” scenarios. And if you can’t save it up, ensure you have a line of credit or credit card available for use if necessary.

Bottom line:  Everyone needs a little financial flexibility and everyone needs a financial plan.