Approach financial planning in a new way

Your financial plan should be about more than numbers and money, it should be about life where your finances are simply a collection of resources to be drawn upon or added to. Consequently, you will find the experience much more rewarding if you focus on the life outcomes you desire and use the choice assessment as a means of measuring if those choices are attainable. Whether the assessment is good or bad is simply relative to your own perceptions and overall desires.
Your plan is never done

No matter how detailed or comprehensive your plan is, it will never really be done in your lifetime. Time and life will continue to march on, your thoughts for the future will change, your life today will encounter unexpected detours, and the world we live in will evolve in ways none of us can imagine.

The objective of building a plan is to allow you to make a determination of where you think you want to go and understand, if ceteris paribus (all else being equal) were to unfold as expected, would you be happy with the result.

Our planning tools are there 24/7 and your plan is a like a living document that should evolve and change.

Planning is not an exact science

As much as you may wish it to be planning is not an exact science. Planning is about making best guesses about the future and understanding the likely outcomes, not about gazing into a crystal ball and knowing the future. Focus your energies on the things that you can control and believe most likely to happen.

See the Future Choices section for how to stress test your plan.

It is better to be accurate than precise

When it comes to planning over the long-term accuracy is reflected in the magnitude of your data inputs and outputs, while precision refers to the exactness.

A measurement could be done very precisely – calculate spending via a process that determines anticipated spending down to the last cent – but that does not necessarily mean it will be an accurate reflection of reality.

Providing more digits increases precision, however, accuracy does not increase. In fact, relatively speaking accuracy decreases. When you make estimations about the future use figures you instinctively know or get from others and concern yourself with making your choice accurate to within a year or two and to the nears $100, $1000, or $10,000 figure depending on the financial magnitude of the choices.

Making the most of Life Today

No matter if it is your first time in, or a you have been in many times, these tips will help keep you on track.
When it comes to expenses don't get bogged down in the details

The wizard got you started with a baseline figure for your recurring lifestyle expenses. If you haven't already, at some point you will want to get a bit more granular but do it strategically.

Getting too granular won't help you, in fact it will probably be painful and difficult. Focus on bucketing your recurring expenses into broad categories, and only break them down further as required. Suggested categories; food & drink, family costs (ex education), hobbies & activities, personal items & care, other.

Don't forget, that as you break down your expenses to reduce the value of "Basic Lifestyle" costs that we got you started with.

"Operating Costs" are included inside the item

To keep things easy operating costs for property and vehicles are enter in and found inside the item. We did this so that the costs will automatically stop when the property or car is sold; why budget for a car lease when you no longer have the car?

Be careful not to double count operating costs in your basic expenses and use the notes feature if you need or want to record details included in the value.

Update your life today with meaningful changes, the little things can slide

Be it savings, debt, or expenses don't get too hung up on updating the values every time you come in (once you are comfortable with them). Our systems will update the values of your savings accounts and debts based on the input deposit and repayment schedules you supplied. It is a good idea to update them every few months or if a major change has occurred.

As this program is all about planning for the long-term, don't try and modify your inputs for minor variations, like high grocery bills during the holiday season. Try and keep a view on how things are on average throughout the year (the downs will balance out the ups).

Considerations about Future Choices

Future Choices are easy if you start with things which are inevitable, and what you know you really want. By changing a few elements of your future will help you discover that more than you think may be possible.
Setting retirement and future income streams

If you have not already retired, then you can modify your planned retirement age simply by changing the last year in which you will work - it is that simple. This will not affect when you start drawing from your retirement savings (RSP's etc.) as converting to a RIF (retirement income fund) can but must not happen in the same year.

Should you be lucky enough to have a defined benefit pension add this as a future income stream. You may not yet know your exact entitlements but make a best guess and revise it as new information comes to you. Eventually this will be part of your life today.

CPP & OAS have been automatically entered for you. Most of us will receive the same amount of OAS. For CPP we have used the national average as your starting point. If you would like to get your figure from Services Canada, you can do so logging into your My Service Canada Account and requesting your statement of contributions.

Be it cars or real estate there are some choices to be made.

If you told us you own a car, we purchased new cars for you (at the same price you previously paid) with the frequency input during sign up. Most of us however will at some point stop driving; remove (edit & delete) the cars you won't buy - or change the end date of lease.

Similarly, if you have not done so, most Canadians choose to downsize their home or move to a rented retirement home in the later stages of life. Consider making these decisions in your plans. Don't forget, if you stay in any home a long time you may need to make major renovations like a new roof, new furnace/ac, or simple to replace expensive appliances.

Take some time to modify your future expenses

Your recurring expenses will change with the passage of time; kids will move out on their own, health care costs will go up or down, habits may change. Think about your own life and the substantial changes that may take place and how that will affect our regular patters.

If you haven't already retired a simple rule of thumb is a good place to start (it shouldn't finish here though). Conventional thinking says expense in retirement will only be 70% of what they were when working. For your chosen retirement date, reduce your expenses under future choices and see what happens.

The different phases of life will probably also be accompanied by different activities. Build in balance to your vacations plans to match your phase of life - see our blog on Go Go, Slow Go and No Go to find out more.

Choice Assessment, the answers you really want

Choice assessment is why you are here, and our forecasts will help you be sure that you are on the right trajectory.
The choice assessment overview lets you know if your choices are possible

Possible is defined as having enough cash sources to meet cash demands in every year of your plan.

The choice assessment comes with 3 overview results green, yellow, red (good, almost bad, ugly) and is simply an evaluation of if your choices are possible, given your current inputs.

Green: your plan is on track. Yellow: your plan succeeds but is not considered robust as funding of some years my come close to depleting your savings. Red: not all years can be funded, and you will need to make some changes - make more money (or earn for more years), spend less, sell property, or change the timing of events like RIF conversion or activities.

No matter what your assessment, it is your plan. Our goal is to keep you on track.

The Net Worth report is powerful

Net worth is simply the total value of what you own less what you owe. Net worth will change over time particularly as you move from accumulation (savings) years to spending years.

For your plan to be successful your net worth must always be greater than zero. After the total however the composition of you net worth is the next most important factor. Use the chart report to how the make up of your net worth changes over time by clicking on the legend, or to find out the make up of your net worth in a given year by clicking on that year.

For your plan to be successful your net worth must always be greater than zero. After the total however the composition of you net worth is the next most important factor. Use the chart report to how the make up of your net worth changes over time by clicking on the legend, or to find out the make up of your net worth in a given year by clicking on that year.

Your detailed report sums your choices up including a withdrawal strategy.

Your detailed report is powerful, but don't dive in before you plan is green and in a stable state.

The detailed PDF report will sum up how your accounts change over time, your annual withdrawals, taxes and spending, but none of it matters if you plan does not work. Remember making your plan work really comes down to balancing your choices as you can't have it all.

Unless you have worked with an advisor, the detailed draw down strategy found in your report may not be "optimal" but will be representative of the auto-drawdown strategy in place.