Life's better with a financial plan

Wednesday 4 October is the first ever Financial Standards Planning Board (FPSB) World Financial Planning Day. In collaboration with the FPSB, here is a reminder of what financial planning is and what it can do for you


If money worries keep you awake at night, you are not alone. A global survey by the FPSB finds that most people feel challenged by their finances, with relatively few saying they are very knowledgeable about financial matters, or highly successful at sticking to their financial goals. According to the study, knowing who to trust is the biggest barrier to working with a financial professional, even though consumers are interested in financial planning services to help get them on track financially.

“Money doesn’t take care of itself, and that fact can create a lot of anxiety,” says Jacqueline Lockie CFPTM Chartered FCSI, head of financial planning at the CISI. “If you don’t plan where you’re going with your money, you may not end up where you want to be. A financial plan can get you on a path toward your goals, which can give you greater peace of mind and likely, a better night’s sleep.”

A blueprint to reach your goalsFinancial planning is the process of developing strategies to help you manage your financial affairs to reach your life goals. Think of it as a blueprint for your financial ‘house', or as a road map to get you to your goals.

“Most of us would not build a house without an architect’s plans or travel to a new destination without a map,” says Jacqueline. “A financial plan is perhaps even more important, because it addresses so many aspects of your financial life to get you on track toward achieving your goals. At the same time, a financial plan can help you manage unexpected financial emergencies that invariably come along, like losing a job or dealing with a serious illness."

Jacqueline says that you can do the basics of financial planning by yourself or get more integrated planning advice with the help of a qualified professional. Either way, a comprehensive process should address all aspects of your financial life. That means looking at your spending, debt, savings, investments, taxes, insurance, retirement fund and estate plan. “When you make a decision in one of these areas, consider how it will affect your overall financial picture," she says.

Financial planning is not just for the wealthy, either. You might decide to put together a financial plan for many reasons: to save money to buy a home or car, fund your children’s education, retire comfortably, make a charitable bequest and more.

A process to get you thereJacqueline emphasises that financial planning is a process – it’s not a product, a one-time event, or a pre-packaged solution. Instead, financial planning starts with your goals, needs and unique situation, and the plan evolves from there. The financial planning process should include these steps:

  • Define your goals, when you want to reach them and what they will cost. Write it down. This helps you stay accountable to your plan and more likely to succeed. 
  • Understand your current financial situation. List the value of everything you own and everything you owe. Track your monthly income and expenses. Some people find it difficult to face these money facts, but don’t be discouraged. Financial planning can help you improve your situation.
  • Build a realistic plan to achieve your goals. Your plan might include paying down credit card debt, saving money in an emergency fund, getting more insurance, adding to your retirement savings or investing for your children’s education. If you have several goals, prioritise them and set a date for accomplishing each one.
  • Take action. Don’t delay. That way, time is on your side to reach your goals. Have deadlines and be specific.
  • Monitor your progress. Review your financial plan once or twice a year, or when there’s a major change in your life. Make adjustments to stay on track.

A guide along the waySome people feel comfortable developing their own financial plan, but you may prefer to work with a professional who can help you prioritise your goals, analyse your financial situation, recommend solutions and make adjustments over time. That’s where a financial planner comes in. Just like an architect helps design a house and a travel agent helps map out a trip, a financial planner can help guide your financial life.

To find a competent and ethical financial planner you can trust to be qualified to offer comprehensive financial planning, Jacqueline recommends that you look for a planner who holds the CERTIFIED FINANCIAL PLANNERTM certification. CFP professionals voluntarily agree to adhere to professional standards that include initial and ongoing financial planning education requirements. They also must meet global standards for experience and practice, undergo an exam process and follow a code of ethics. “Our code of ethics obligates CFP professionals to put their clients’ interest above their own,” says Jacqueline. “When you are placing your hopes, dreams – and money – into someone’s care, you should expect no less.”

For more information about financial planning and choosing a financial planner, visit our Wayfinder website.

Published: 04 Oct 2017
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