Financial Planning

Ensure a reasonable balance between outflow and inflow of funds so that stability is maintained

Financial Planning helps ensure a reasonable balance between outflow and inflow of funds so that stability is maintained.
Ten reasons why financial planning is important


1. Income: It’s possible to handle income more effectively through planning. Managing income helps you understand how much money you’ll need for tax payments, other monthly expenditures, and savings.
2. Cash Flow: Increase cash flows by carefully monitoring your spending patterns and expenses. Tax planning, prudent spending, and careful budgeting will help you keep more of your hard-earned cash.
3. Capital: An increase in cash flow can lead to an increase in capital. Allowing you to consider investments to improve your overall financial well-being.
4. Family Security: Providing for your family’s financial security is an indispensable part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones.
5. Investment: A proper financial plan considers your circumstances, objectives, and risk tolerance. It acts as a guide in choosing the right types of investments to fit your needs, personality, and goals.
6. Standard of Living: The savings created from proper planning can prove beneficial in difficult times. For example, you can make sure there is enough insurance coverage to replace any lost income should a family breadwinner become unable to work.
7. Financial Understanding: Better financial understanding is achievable when measurable financial goals are in place, the effects of decisions understood, and results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.
8. Assets: A nice ‘cushion’ in the form of assets is desirable. But many assets come with liabilities attached. So, it becomes crucial to determine the real value of an asset. The knowledge of settling or cancelling the liabilities comes with an understanding of your finances. The overall process helps build assets that don’t become a burden in the future.
9. Savings: Financial changes can still throw you off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency or for educational purposes.
10. Ongoing Advice: Establishing a relationship with a financial advisor that you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current economic circumstances and develop a comprehensive plan customized for you.


“A financial plan can change a person’s view of life. People feel in control.”
– Brooks Bark, Wealth advisor at BMO Nesbitt Burns


Issues That Emerge


Although every plan is unique, people often face common problems:
A need for information. Many business owners and managers have their focus on building their companies or careers. Although many have accumulated some assets, they don’t know whether they will be able to fund their retirement.
Lack of free capital. Many entrepreneurs have most of their wealth tied up in their business and are uncertain about the amount or process of converting this value to personal money they can invest.


Uncertain income. Many entrepreneurs and managers have variable incomes based on the performance of the business or a variable compensation structure. Without income certainty, it can be challenging to predict future savings and establish a rigorous saving regime.
Competing priorities. Saving goals can compete with other legitimate demands on cash flow, such as children’s education needs, capital demands of a business, and funding a lifestyle that provides a happy and comfortable family life.


Absence of a safety net. Previous generations enjoyed defined-benefit pension plans and often relied on government programs such as CPP. People are now less confident that these programs will fund retirement and be less sure about the amount of cash they will provide. The implication is that people have more responsibility to diversify their sources of retirement funds and to ensure they have adequate funds in place.


Lack of clarity on acceptable risk. When entrepreneurs have most of their wealth tied up in their operating company, they must decide on the appropriate level of risk for personal investments.