ASK THE LADY OF MONEY: How to Plan a Financial Plan and Prepare for Success in 2022

Dear Money Lady Readers – Have You Created Your Financial Planning Resolutions For The New Year?

They say that in order to build a good financial foundation, you need to have three main things in place to ensure your long-term stability and to get into debt-free and wealthy retirement. Some even called it a “three legged stool,” because without all three it would rock just like your financial plan wouldn’t be complete without the three foundations of your life.

So, let’s build your stool for 2022 to make sure you’re ready for the future. The three foundations of financial wealth are: income, insurance and investments.

Sounds pretty straightforward, right?

Income

Well, everyone knows that you have to work to survive, that’s obvious. But, do you earn what you are worth or just what you think is good enough?

Never underestimate your earning potential because the fastest way for you to build wealth is your ability to earn more. You are the most important asset you have. A lot of people think there is a limit to their income, but that is a mistake. Successful people always believe they are worth more. If their employer doesn’t give them the salary they feel they deserve or the promotions they want over time, they quit and move to another company that will.

Compared to your entire life, you only have a small window of time to earn your fortune and build a career, so do it – if you are not happy and feel that you are worth more, make the changes that you are. you know you have to.

Another part of the income is getting a part of your take home pay to start working for you. Basically you want to pay yourself first. This can be done by contributing to an employee retirement or savings plan. If you are lucky enough to have your employer up to part of the contribution, then definitely take advantage of it.

Assurance

When we have counseled clients in the past on protecting their future, we have always used the acronym WILT, which stands for Wills, Income Protection, Life Insurance and Tax Planning.

You need a will to make sure your estate is divided the way you want it to and all minor children are taken care of. Income protection is often overlooked and considered too costly by most people who often feel they have enough disability insurance from their employer. Most people focus on life insurance only, however, it is important to remember that most accidents do not result in death and you are more likely to be seriously injured or disabled and unable to continue. to work.

Tax planning is the final element of asset protection. Insurance is a great tool for paying the capital gains tax your estate will owe upon your death, or if you are a business owner, it is an investment tool with creditor-protected benefits. When you are young, you should always consider purchasing a participating whole life insurance policy that grows over time and has cash value that you could access in retirement.

Investments

This could mean investing in traditional tax incentive products like RRSPs, TFSAs, or even non-registered accounts. If you prefer, you can completely move away from the stock market and invest in real estate, in primary and / or rental residences.

Monetizing money is the key to building wealth. You will never be able to earn and save enough in your lifetime and if you could it would be crushed by the cost of inflation. That’s why you need to invest in assets that will appreciate and grow over time.


Investing can also mean investing in yourself to improve your future prospects and increase your income. Remember, it is impractical to think that once you graduate, you can stop learning.


Debt is inevitable when investing, but you should always have a plan in place; the one that is reviewed each year, to eliminate it upon retirement. No one should ever retire with debt.

Investing can also mean investing in yourself to improve your future prospects and increase your income. Remember, it is impractical to think that once you graduate, you can stop learning.

Unfortunately, there is always someone else who has gone a step further to improve themselves and will land the job or position you want. School debt is a reality for many, even for people in their 40s, many of whom now realize that they really want to make the most of their careers, to prepare for their 50s and 60s. Never be afraid to take a step back so that you can leap forward. Build your three legged stool and I guarantee you will retire debt free and rich.

Good luck and best wishes,

ATML – Christine Ibbotson


Written by Christine Ibbotson, author of three books on finance and the Canadian bestseller “How to Retire Debt Free & Wealthy”. Visit www.askthemoneylady.ca or send a question to [email protected]