Creating Your Financial Roadmap: What are the Four Cornerstones of Financial Planning?

Date: November 4, 2022

We all have financial goals – buying a home, ensuring our children get a good education, visiting new parts of the world. It’s exciting to think about what you want to do in the future and where you want to go, but far too often we avoid doing the work to set ourselves up for reaching those goals. Instead, we daydream and hope that one day we can visit that island getaway or go on that mountain-climbing trip. But, as they say, hope is not a strategy. If you want to reach your financial goals and set yourself up for your future, you need a financial plan.

Financial planning doesn’t have to be complicated and exhausting – in fact, clarity in how and where you’re spending your money actually makes life a lot easier! Westoba’s Director of Financial Planning, Rhonda Oakden, explains that financial planning isn’t just for those who are well established in their careers. “Everyone benefits from thinking about their financial future, whether you’re just starting out in your career or you’re thinking about retirement. My role is to ensure that my members are clear about their goals, their options, and the direction of their financial future.”

Just like a map makes the road trip a lot smoother, your financial plan makes achieving your goals feasible. When it comes to creating your financial roadmap, there are four cornerstones that you should keep in mind.


1. Financial liquidity

For those unfamiliar, financial liquidity measures how easy it is to convert a security or asset to cash at market price. Essentially, how quickly can you convert your assets to cash? Well, for starters, cash is the most liquid of all – it’s already cash! Other assets like stocks and bonds are also relatively liquid because you can sell them quite quickly. Some assets are a little more difficult to convert, like land or real estate. Why does this matter? When life throws you a curveball, like unanticipated home renovations or a job loss, it’s important that you have something set aside to be able to support yourself through emergencies. Knowing what you can easily convert to cash is crucial in this case. While your financial plan should outline how you will save up for that vacation, it must also include enough of a cushion to save and cover emergency expenses without putting you in debt.


2. Retirement strategy

Whether retirement is in the near or distant future, your financial plan must include a strategy for how and when you will retire. Perhaps not surprising, but the earlier you start saving for retirement, the better, but that doesn’t mean you can’t start saving at any point in your career! When thinking about your retirement strategy, you’ll want to reflect on exactly what kind of lifestyle you see for yourself, how much you’ll need to support that lifestyle, and when you see yourself retiring. Thinking about this now means that you won’t be scrambling to figure out how to support yourself when you’re at the end of your career.


3. Critical illness and disability

Again, because life is full of surprises – and not all of them positive – it’s important to be prepared for all possible scenarios. In the event of a critical illness or disability, would your income be affected? How much would you need to support yourself while you’re away from work? Would an illness or disability make it difficult to continue saving for retirement? Does your current job offer disability insurance? These are questions that you need to ask yourself in the planning of your financial roadmap.


4. Financial security at death

It may not be that fun to think about, but it’s that one thing we can count on, along with taxes. How can you keep your family protected and supported when you die? Life insurance is a big piece of this puzzle. You can use it to cover living expenses, post-secondary education, and other future costs for your family, as well as to pay off your outstanding debts like mortgages or credit card balances. Having a plan for after you’re gone is key to ensuring that your family isn’t left with a financial burden they can’t manage.

Financial planning can feel like a daunting task, but the clearer you are on where your money is going the more successful, you’ll be in achieving your financial goals. And luckily, we have an expert team of knowledgeable Financial Advisors who not only have years of experience but are here to create a plan that suits you and your specific needs. Our team works with people at all stages of their lives and careers who come from all walks of life. Our goal is to offer solutions that work for you and empower you to take control of your financial life.

If you’re ready to create a plan or just need a sounding board for guidance on your options, get in touch with us today!

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