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Benefits of Financial Planning
The benefits to you of taking some time and sitting down with professional advisors to create that financial planning road map are numerous and will depend on your individual circumstances. However, one of the key benefits of a well-laid out financial plan that is implemented and monitored is that it will generally allow you to reach financial independence sooner than if you had not formulated a plan of action.
Financial independence can mean different things for different people but for many Canadians it means the ability to cease regular employment knowing that they have enough assets and retirement income to maintain a certain lifestyle for the rest of life and provide for their beneficiaries after death.
Since every one has different goals and objectives and everyone has different facts and circumstances, it is conceivable that your current financial decisions are not congruent with your true goals and objectives.
As an example, some financial planning courses and textbooks state that non-registered assets should be depleted before registered assets are depleted. Although this "rule of thumb" will apply to many people there are some people where it may make sense to withdraw from a registered plan such as an RSP before accessing non-registered account due to their specific situation.
Here are some other financial planning "rules of thumb" that may not apply to everyone based on their own goals and objectives and their own facts and circumstances:
- "Everyone should maximize their RSP contributions every year";
- "The higher income earning spouse should always make spousal RSP contributions";
- "You should always have a named beneficiary on your registered plans so that probate taxes are avoided";
- "Everyone should have life insurance";
- "You should always purchase a home instead of rent";
- "You should always have fixed income investments in registered accounts and equities in non-registered accounts".
As a result, another key benefit of the financial planning process is that competent professionals will help you determine what is your best course of action to meet your own goals and objectives based on your own facts and circumstances. Without going through the financial planning process these goals and objectives may be delayed or never met.
Going through the financial planning process can also give you peace of mind. That is, just knowing that you have consulted with experts in the various fields of financial planning and these professionals have provided recommendations that are being implemented and reviewed periodically should give you comfort that your financial goals will be attained!
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