Demystifying the financial plan

Many people buy into popular myths about what a financial plan is and who needs it. They believe that it’s only for people who have a lot of money, with complex finances, and who can afford someone to manage it for them like a financial planner.

These myths are not true. Managing money is easier than you think and you don’t need to be a math wizard or a banker to figure it out.

Here are three realities of financial planning: 

Everyone should have a plan

It doesn’t matter if you have a lot or a little. Everyone can take advantage of making a few good choices about how to manage their money. The questions you ask yourself are always the same.

  • How much of my paycheque will go to expenses?
  • How can I manage any savings at the end of the month?
  • What are my long-term goals?

Money Fact: According to the Financial Consumer Agency of Canada, 93% of Canadians who have a budget stick to it.

Financial Basics Workshop. Financial Consumer Agency of Canada. Published as a PDF. Published 2022. 

Everyday money goals are part of a plan

A big part of a plan is simply deciding what you want to accomplish and how soon you want to do it. You’ll find there’s nothing complex about most of the day-to-day changes you can make right now to improve your finances. Here are some examples of simple goals that can greatly impact your financial health:

  • Reduce unnecessary expenses.
  • Put some money in an emergency fund.
  • Pay off one of your credit cards.

It won’t take long to make a plan

A basic plan doesn’t take long to create and you don’t have to wait for a team of experts to do it. You can probably write down most of your expenses off the top of your head. This simple step helps you see your income, expenses and goals in one place. Once you decide which goals you want to achieve first, it should be easy to stay on track because you know exactly what you have to do each month.

Now you know that money plans are not just for rich people with complex problems and time to manage other people. Here’s how you can get started on a simple plan that won’t cost anything and put you on a better financial path.

Know your “money-in” and “money-out”

Make a list of all the money that comes into your household, such as paycheques, tax returns or government assistance. Make another list of where it goes. Calling this a budget will make it sound like work so think of it as your Money-in, Money-out list. Not sure what to include? Check out this free and easy-to-use budgeting tool.

Set simple, realistic money goals

When setting goals, choose ones that can be achieved in the short term, such as paying down debt and starting an emergency fund. Whatever they are, write them down. Research shows that writing down your goals will help you achieve them.

Automate as much as you can

The simplest plan is the easiest one to follow. Once you’ve set your goals, do everything you can to automate things. For example, if your number one priority is to pay down a high-interest credit card, set up an automatic payment that will be taken from your bank account every month and applied to the card. Time the payment to your pay period so the money never sits in your account where it can tempt you to spend it.

It all adds up to less stress

By writing down what you want to accomplish, and having a money plan, you will start to relieve some of the stress that came with not knowing where your money went. You’ll see how it could work harder to lower your debts and build good credit. Plus, it also: 

  • Provides a view of your overall financial health (what you make, what you owe, and your cost of living).
  • Shows you where your money is going and where you can save more by spending less.
  • Keeps you focused and makes those goals more likely to be achieved.

For more great tips on managing your money, see 5 Steps to Help you Get into a Better Money Mindset.


Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.

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