Financial planning is something you will start to hear about more and more the older you get. 7 year old me was definitely not thinking about planning out my financial future by careful drawing out a game plan for maximizing the usage out of my TFSA, RRSP or even the new DLC that just dropped the FHSA account. I was too preoccupied with thoroughly exploring the neighbourhood on my little but mighty bicycle and shooting hoops. A much simpler time for sure.
However the older I got, the more financial subjects started looming its head into subject matters that surrounded me. And so, my curiosity and journey into the world of personal finances began. Little would I know that this journey would be one hell of a rollercoaster. With countless days, feeling stumped and lost. But also days, where I felt like I was really making some solid progress.
However, it all led me to here. Where I still have boat loads to learn, but at the same time feel confident in the fundamentals I have picked up along the way. With all the growing pains dealt on this important pillar of life, I wanted to share some of these learnings and insight in a clear and concise format. This is in hopes it helps you or someone else out there to get them thinking or provide new insight on this topic matter.
My main take away from everything I have learned is that yes financial planning is not a glamours topic to most. However it is something that with a little bit of initial investment will greatly improve the quality of your life. I am going to try and introduce the benefits of it through the lens of short term, mid term and long term benefits.
Short Term Benefits
The immediate improvement you will find with your first jump into financial planning is significant stress reduction. You know that pesky and daunting feeling that you feel then thinking about your future and where it will take you? Yes that. There are a few reasons I have found for this.
The first and foremost reason is that it helps clears up some of the fog of the unknown. The future is mystical and convoluted as it is. This paves the path for 1 of 2 commons outcomes when ignoring. Either ignoring the problem until you are absolutely blind sided by one of life’s curve balls. Or living in a state of constant fear of the future. Not fully being able to enjoy being the the present as the uncertainty of the future stresses you out slowly but constantly. After all, you may be one car breakdown away from Financial ruins for all you know (and we all know your car does not care about how ready you are for those pesky repairs).
So how does financial planning play into this. Let’s say you begin with the first pivotal step of this journey. And that is what I like to call, grabbing a snap shot of where you stand financially. Whether it be the state of your savings, debt or whatever the situation may be.
In simpler terms, it is a review of what you are worth today (Strictly financial of course, cause every one of you are priceless). Now you will have a more clear picture to work off. This will help reveal all the places your money is parked at, and also all the places you may have outstanding debts. You can look at not only what you can work on, but also what you can be proud of. This will give you some cold hard numbers to work with that objectively show you where you stand.
From there you can make judgements on how well you are doing and how well you would be able to handle various changes that may come your way. This effectively clear op some of the mystical fog of the unknown which should most definitely help clear up some immediate stress.
Now what does relieving a little stress of your shoulder in regards to your personal finances do for you? It allows for you to better focus your efforts and attention on other aspects of your life. And I am sure we all can relate to there always being something to test you on the daily.
Mid Term Benefits
Now for some mid term benefits. These are noticeable improvements you can recognize by chipping away at your planning a bit longer. These include things like reaching savings goals for some of life’s pleasures. I would mainly add working towards being able to comfortably afford the things in life that brings happiness to most. This may include that new computer, car, vacation get away and even in some markets a down payment for a home. I would even throw in the creation of an emergency fund helping to improve your quality of life. Cause not only with this sustain you financially during economic down turns, but more importantly give you the mental peace that you will be covered with some of life’s unpredictabilities.
How this becomes magically possible you may wonder? Well timelines may vary, but with the short term benefits we talked about earlier, it can progress easier into slowly but naturally developing a savings structure to reach these goals. It may feel like a far distant reality at first, but you would be surprised how quickly you can find yourself here. However as with most things in life, consistency is key!
Long Term Benefits
Once working on maintaining a clear picture of your finances progress, it leads to some great long term benefits. These are most importantly in securing your future. Be it in the form of retirement, an emergency fund or anything else that looms on the future horizon. Having maintained your finances for long enough, you will begin to manage, spend, save and even hopefully invest your money a lot more effectively. These efforts begin to snowball and slowly but surely, you will find yourself making strides in areas you were blindly unaware of before hand. For my personal self, this consists of starting a nest egg for my retirement very very early. Additionally, it includes saving up for a down payment for my first home. With my determination in these two aspects I have learned lots of useful tool to help me along the way. All of which I will be sharing here on Newfoverse! So stay tuned, and hopefully this helps peak your interest in the world of personal finances!
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