While financial situations vary from person to person, there are several financial items which can be universal to all Canadians.
 
Human nature dedicates that someone is more likely to follow a plan if it is written. Over 75% of Canadians do not have a written financial plan. A formal plan also provides a road map to ensure that you are on track to achieving your goals. Once written, the plan should change as your situation changes. Meet with you advisor at least once a year to review your plan and the progress made.
 
• A Will and Estate Plan
The cornerstone of any complete financial plan is a professionally developed Will and Estate Plan. According to a 2005 Ipsos-Reid survey, 40% of Canadians aged 35 to 54 do not have a will. With a will, there are provincially determined ways of dividing your estate, which may not align with your wishes. Plan, the appointment of a capable executor and a contingent designate is also important to ensure that your wishes are accurately and efficiently followed.
 
• Personal Directive and Power of Attorney
As mentioned above, a will is designed to allocate your estate upon death. However, what is you are not able to make your own decision or are unavailable to sign important documents? A Personal Directive ensures that you health and personal care wishes are followed, even when you are unable to express them verbally. A Power of Attorney allows someone to act on your behalf for your financial affairs, which is particularly useful if you travel extensively or spend longer periods away from home.
 
• Pay Yourself First
Set up a pre-authorized contribution, on a regular, recurring basis to an investment account, whether registered or non-registered. You will benefit from dollar coast averaging, which removes the prices risk associated with large, single purchases.
 
• Registered Retirement Savings Plan
The benefits of an RRSP are well known: immediate tax reduction, tax deferred growth, and the ability to split post-retirement income with your spouse. Ideally, savings should be accumulated on a 50/50 basis with your spouse.
 
• Pay Your Mortgage More Frequently< p/>
If you have a mortgage, make payments as frequently as possible. Weekly payments pay the same amount over a whole year as monthly, but repay the principal earlier, resulting in lower interest costs. This strategy could save thousands of dollars over the life of the mortgage.
 
• Insurance: Health, Disability, Life and Credit
Insurance is very important in the overall financial health of any family. It protects your income to your family, it protects the money that you’ve already saved and it offers peace of mind during a time when you most need it. There are a wide range of insurance types for a variety of personal situations.
 
• Three Months of Savings
A prudent rule of thumb is to have a minimum of three months’ worth of income set aside in case of situation such as layoff, family emergency or home repair. Saving this money can take time, especially when focusing on other aspects of life. A Line Of Credit (see below) offers the buffer that you may need.
 
• Credit: Get It While You Don’t Need It
It is quite easy to get credit when you do not need it. A Line of Credit is likely the most flexible alternative; however, other options may also work for your situation. Putting in place your emergency fund (three months of savings) can be accomplished with a line of credit.
 
• Registered Education Savings Plan for Children or Grandchildren
If you have children or grandchildren, the use of an RESP is a wonderful, tax-deferred method to save for their education. With a minimum grant of 20% on the first $2,000 contributed to the plan, a potentially higher grant for middle and lower income families, how often does the Government give you money?

November 14, 2007