In 1989, Steven Covey’s book, “The Seven Habits of Highly Effective People” became a bestseller.  It is as relevant today as it was 28 years ago and continues to be a best seller.  The reason being is because the wisdom that Covey shares is both practical and loaded with common sense.

His second habit, “Begin with the End in Mind” is, in my opinion, very pertinent for those of us that want to have a solid financial plan.

When building a financial plan, it is smart to recognize that there are uncontrollable events that occur in life.  We’ve all been witness to these life events in some capacity. May it be a friend, a family member or even on a more personal level. Illness, injury or ‘bad luck’ can destroy livelihoods. It is for reasons such as these that having money in various forms will help smooth the passage through life. 

Because we live in Canada, we are blessed to have the social net that we have.  As Canadians, we take it for granted that our basic health care is provided to us and paid for through our tax system.  We also have our financial well being taken care of to a small extent by programs like Old Age Security, the Guaranteed Income Supplement, and the Canada Pension Plan.  We should be thankful for these programs, but we should also recognize that these programs are designed for subsistence and not for prosperity.

A good starting point in designing a financial plan is to give consideration to where the money comes from, beyond what the social safety net will provide you in the event that you get sick or injured.  The old adage, “our health is our wealth” is more than a trite saying.  Consider those people that cannot earn a living because of illness or injury.  Savings and investments get drained quite quickly when revenue is reduced and the cost of recovery is high, in spite of the social safety net. 

We also have seen the impact on friends and family when the “bread winner” passes away.  It is common for the survivors to have a difficult time making ends meet because their capacity to pay bills is diminished or evaporates.

For this reason, it makes sense to either have at least three months of one’s fixed costs squirreled away in a liquid savings account and to have proper insurance in place.  This advice is not just for young families exclusively.  Because Canadians are living well into their 90’s and 100’s, proper insurance planning continues to make sense because costs to savings and estates are being eaten up by health care, taxation and non-existent estate or bad estate planning.

As a Financial Advisor, with the Certified Financial Planner designation, I have witnessed a wide range of events in the lives of many people.  It is clear to me that while none of us get out of this world alive, we all can thoughtfully plan and execute our affairs for the benefit of those we love and care for.  It all starts with the end in mind.