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NOVEMBER 7, 2023

Six Pieces to Financial Wellness

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Financial Wellness is the balance between having a healthy state of well being today while preparing financially for tomorrow. Why is it important? Personal Finances are the number one cause of employee stress. Being financially well can help you reach your long-term goals, be prepared for emergencies, reduce stress, but also give you the freedom and choice about how to spend your time without being constrained by financial limitations. 

There are six components that work together to achieve financial wellness:

  1. Financial management: 

Financial management shows you how you spend your money. Are you a saver or a spender? Do you live pay cheque to pay cheque? Do you have a budget? Learning how you currently spend your money can help you plan your finances. If you currently have debt, pay it down first then tackle investing for your future.

  1. Asset management: 

What is your net worth? Listing down all your assets and all your debt can give you an idea of what your net worth is. It is very common to have a negative net worth when you are young. The goal is to have a larger net worth. 

  1. Estate planning: 

Estate planning in Canada is a multi-step process that may involve consultation with various experts, such as legal, tax, and insurance professionals. Depending on the complexity of your estate and your family situation, you may be able to handle some or all the estate planning on your own. Determine if you can handle the planning process alone or if you will need help.

  1. Tax planning: 

You can learn how to be tax efficient with retirement income. If you can tax plan- there is opportunity to possibly extend your retirement with your savings.

  1. Risk Management: 

Risk Management consists of being educated on what plans you are apart of and understanding your insurance needs. Understanding your needs and the different types of insurance can play a key role in financial planning.

  1. Retirement and savings: 

It is wise to set aside 10-15% for retirement/savings. Look into what investment accounts can help you achieve your goals for the future (TFSA, RRSP). Your retirement is made up of 3 pillars: Employers Sponsored Pension Plan, CPP/OAS, Personal Savings. The sooner you start planning for retirement, your investments will have more time to grow with interest. 

Understanding these six pillars to financial wellness can help you in the long term and better understand how to make your money work for you. 

No matter where you are in your career, connect with one of our RICs today by attending a workshop or booking an individual consultation. We are here to help you plan for your financial future.