Ask the Money Lady,
Dear Money Lady,
A friend of mine purchased your new book, Don’t Panic, and I only had the chance to look through it briefly. One thing in particular caught my eye though – the “Cascading Financial Plan.” This idea really appeals to me. But I really don’t know how to start planning. Should I see an advisor, or should I just plan by myself? Please help!
Don’t be stressed, Stefanie!!
At the end of 2018, according to the Office of the Superintendent of Financial Institutions, Canada had 88 banks. These banks were made up of 35 domestic banks, 21 foreign bank subsidiaries and 32 foreign bank branches. Unlike our neighbours in the US, Canada is dominated by only 6 large banks, that now control 91% of the entire Canadian financial service industry, with approximately $4 Trillion in assets. Many may think that there are larger industries in Canada, however as of 2019 the financial sector has now become the largest industry in terms of employment.
So why am I telling you this Stefanie? Well this means there are a lot of financial advisors and professionals out there to help you get debt free and wealthy! I’ve said it before – and I’ll say it again, you must have a personalized financial plan. Basic planning is proven to create feelings of purpose; allows you to work towards a goal; and can remove any future uncertainties. Thank you for asking about my Cascading Financial Plan. It is designed to provide you with a “basic life plan” divided into ten-year milestones. Use this only as a guideline and of course, if you are behind on some of the suggestions, that’s okay. This is the time to see where you are, engage your advisor and make sure you are on track for the future. Here we go.
20’s. Career-building, becoming independent and moving out of your parent’s home.
* Acquire consumer and school debt for career advancement
* Build up a good credit history
* Buy into a participating whole life insurance plan
* Begin building an emergency fund.
* Begin saving for retirement (RRSP, TFSA)
* Invest in real estate and update insurance coverage
* Plan for school debt repayment
* Will + Power of Attorney
40’s. Career advancement or change, self-education and personal improvement
* Pay off all consumer debt
* Continue to build wealth – buy additional real estate or add to savings (RRSP)
* Review Insurance
50’s. Start de-cluttering and begin to live on less income
* Maximize saving strategies
* Work toward eliminating all debt, mortgages & lines of credit
* Think about long-term care coverage
* Limit risky financial ventures and monetary schemes
60’s. Simplify your lifestyle and your commitments
* Downsize or right-size your residence
* Reduce as much risk as possible in your investment portfolio
* Eliminate all remaining debt and do not take on any new debt
* Update Will and Power of Attorney
70’s. Have a plan to fill your days
* Maintain or improve your health
* Nurture existing social relationships and build new ones
* Keep brain active, read, educate, stay physically active.
80’s. Stay healthy, continue to be active
* Establish a support system and care directives
* Discuss your wishes with your family
* Plan for emergencies
* Stay involved, engaged and most of all happy!
Hope this helps Stephanie.
Good Luck and Best Wishes,
Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy” Follow on Facebook & Instagram