Financial Planning

What is Financial Planning?

Financial planning allows you to take control of your finances by understanding your current financial state, and prepare for the future. Whether you have a few short term goals that you wish to accomplish, or you're interested in planning for retirement, a solid financial plan will help you to accomplish that!

Why Plan Ahead?

There are a number of benefits to creating a financial plan:

  • Preparing for your future while you're still in school will allow you to get a early start on saving, and over time, this early start could mean a much bigger return in the future!
  • Through the creation of a financial plan, you can learn the basics of investing and how to best support your short and long term investing goals

Financial Goals

What is a financial goal?

  • It is a personal goal related to money (for example, a goal to purchase a vehicle)
  • It involves a time frame for achieving the goal
  • It should be set according to your personal needs and situation

Financial Planning Process

Step 1: Identify Needs

In creating your financial plan, the first step is thinking about your financial needs. What do you need financially to survive, and what would you consider to be a "comfortable" standard of living. Throughout this process, create a list of all of your needs that should be accounted for in your financial plan.

Tip: This can include anything that you find is important to your happiness moving forward. Make sure to include things like a "slush fund" (i.e. money that you can use for rainy days), or if you'll need a vehicle in your everyday life, make sure that you include this in your plan.

Step 2: Set Financial Goals

After identifying your needs, it is important to figure out how those needs will be met. Consider the following questions:

  • Which needs are you saving up for?
  • How much money will you need to satisfy these needs?

In setting your financial goals, be sure to have your day-to-day expenses covered (i.e. a daily, weekly, or monthly budget of essentials), but don't forget to plan for other bigger picture needs (e.g. saving for a vehicle, buying a house, investing your savings).

For each of your financial goals, it is important to set a time frame for the goal, and don't be afraid of breaking one large goal into multiple smaller goals (e.g. instead of setting your sights on saving $15,000.00 for a car, set three smaller goals of saving $5,000 at a time). This way, the original goal may feel more attainable, and also feels better once you've accomplished an entire goal rather than one third of a bigger goal.

Step 3: Explore Investment Options

This step allows you to consider how you may achieve your financial goals through different investment options.

With your financial goals in mind, determine which savings or investment opportunities best suit your needs and goals.

Not sure where to start? Consider meeting with a Financial Advisor either through a local bank or investment firm.


Investment Terms & Definitions

  • Risk: Potential of losing your money, or uncertainty of how much you will gain or lose on your investment.
  • Return: Profit or growth of investment in the form of income or capital gain (higher worth of investment).
  • Portfolio Diversification: having multiple forms of investments to reduce overall risk (e.g. investing in multiple companies).

Risk of Investments

Investments have different degree of risk. It's important to be mindful of short versus long term goals.

Types of Investments

  • Annuity: type of investment contract that pays at regular intervals
  • Bond: a certificate received for a loan made to a company or issuer. Issuer pays you interest at a set rate and repays loan on a set date.
  • Guaranteed Investment Certificate (GIC): investment that protects your investment capital, meaning that you will not lose money. May have fixed or variable interest rate.
  • Mutual Fund: money of multiple investors is pooled to buy a portfolio of different securities. A professional invests the money and manages the fund.
  • Stock: a unit of ownership in a company bought & sold on a stock exchange.

Finding a Financial Advisor

You can find a financial advisor in a number of different places. Financial Advisors can work out of banks and credit unions, they can work as stock brokers and mutual fund dealers, or they can work independently or as consultants. When looking for a financial advisor, look for professional designations and experience, and ultimately make sure it's someone you trust and feel comfortable with.

Right & Responsibilities with Financial Advisors

When working with a Financial Advisor, you have rights and responsibilities to consider. In particular...

You have the right to:

  • accurate information
  • investment account statements
  • fund facts
  • your advisors best recommendations based on your own investment goals
  • know if your advisor has a conflict of interest

You have the responsibility to:

  • ask questions and take notes during meetings with your financial advisor
  • read investment statements and report potential errors

Investment Tips & Tricks

When you're just starting out with investing, don't get too overwhelmed - you can go at your own pace, and there are supports to help you along the way. Below are some things to keep in mind when getting started with investing:

  • Start small - even as a student with less financial resources than working professionals, you can invest a small amount of money each month
  • The sooner you start planning and investing, the quicker you will be able to reach your financial goals.