Written for: The Canadian Press
Financial Planning is a Road Map
Life comes at you pretty fast. You never know when your radiator will give up, or when your car will break down. And while financial planning may not seem like the most fun or thrilling pastime, it can help you navigate all of life’s speed bumps with ease.
Maybe you want to plan for retirement, and time keeps ticking away. Maybe it’s a vacation, or a gift for your mom, or a new condo, but really, it doesn’t matter. A good financial plan, whether short-term or long-term, can help you get there: you could avert dire financial situations, like finding yourself struggling to make ends meet; and foster your financial growth in a way that allows you to live your best life, stress-free.
The first step in devising an effective plan is to ask yourself what you want to achieve: do you want to build an emergency fund, pay down your debt, or go on vacation? Or maybe you’re more concerned with asset-building or saving for retirement.
“A lot of people say, ‘I want to have money,’” says Elena Jara, Director of Education at Credit Canada Debt Solutions Inc. “What do you mean? When your goals are not clear or achievable, they don’t become reality.”
“Building a budget helps to start prioritizing goals,” says Jara. “
“We’ve learned how to get into debt,” says Jara. “But not how to get out.” Whether you are thinking short or long term, Jara insists that it’s best to be realistic. Debt is a reality for many Canadians, and can be a major setback if not handled properly. What’s important is to incorporate what Jara calls “fun money.” Including “fun,” she says, is very important or else it becomes too hard and frustrating. Factoring entertainment and pleasure into a budget not only makes it more practical and accurate, but also can prevent emotional turmoil and allows you to participate in life—not just concentrate on finances.
This is a trap that all people, not just those with debt, frequently fall into: they work so hard towards a financial goal that it prevents them from being active participants in the life they are striving to create. Long-term financial goals can also come with a side of discouragement. All the little hiccoughs along the road to financial stability and freedom can cause you to slip up in your budgeting—and the never-ending cycle of striving to achieve your fiscal ambitions can eclipse why you were saving money in the first place.
“You want to buy that house, but if you won’t enjoy it, what’s the point?” asks Jara. “You are missing out on life—for what?”
Really, it doesn’t matter what you’re saving your money for. Inevitably the best laid plans are thrown into chaos, no matter how far in advance we set them. What matters is clarifying your own personal plans, and mapping out the road you want your life to take. There will always be a way to get to where you want to go.