Imagine you were going to build a house. What would you do first?
1.    Start buying materials from a good hardware store
2.    Decide on the type of house best suited to your wants and needs
3.    Draw up the Building Plan
 
If you chose option no. 2, you’ve made a wise decision. Consider your chances of having a satisfying and stress-free building experience, if you had chosen to "Start buying materials from a good hardware store"?  This approach to house-building would be seen as foolhardy at best.

Astonishingly, this is exactly what most people do when setting out to build their financial life. They either go into the market place to buy financial products, or entertain the advances of a Financial Sales Representative (such as a banker, insurance salesman or stock broker) to be sold a financial product.  As a result, their financial portfolio of Debt, Savings and Investments, in the long run, bears no resemblance to their personal goals and aspirations, or to their resources and income needs. Consequently, they feel trapped and develop a condition known as Financial Stress.

Sufferers of this form of stress feel out of control.  Their life seems to be leading them, instead of the other way around.  They are fearful; haunted by the constant concern that their financial resources are insufficient to meet a host of competing demands.  The situation is compounded by the overt and invisible demands of commercial advertisers and society in general.

In fact, it is increasingly evident that financial stress has become a major threat to mental, emotional and physical health.  Its effects on family life, social behaviour, job productivity, and personal well-being can be disastrous.

While medication (including drugs prescribed or otherwise), entertainment and therapy can offer temporary relief or simply mask the problem, the root cause remains unchecked.  The loss of direction in and control over your financial affairs is the fundamental problem.  In such a case, competent financial counseling/planning is the only solution.
 
Financial Planning is the process of establishing your financial goals and developing a plan to accomplish them through the use of financial products, personal discipline and motivation.   The plan helps you address the following key issues:

1.  What are your goals?
2.  What are your available personal and financial resources?
3.  How do you manage your income and expenditure?
4.  How will you get from where you are to where you wish to be?
5.  What are the risks you are likely to face?
6.  How to implement a course of action?
7.  How to monitor, review and up-date your progress?
   
A Financial Plan is developed to achieve your goals and aspirations. It is also designed to match your psychological profile, making it easier for you to follow. It is a personal plan. The more that you bring to the planning process, the more rewarding the experience will be.

As a result, you can enjoy peace of mind. So start to put your financial house in order, right away. After all, it is where you have to live.

by Lloyd de Lacy Ince ChFC, CLU, LOA (Inst. Of Can. Bankers)

For more information on Personal Financial Planning, complete our free Financial Self-Test or contact us.