How to Create and Automate your Financial Plan

• October 19, 2020
• Aleksey Weyman

Most people know that financial planning is an important topic, but it can be difficult to understand its complexities..

Let’s face it, the financial models of our world can get pretty complicated. The question of whether that’s because of an abusive agenda by financial institutions or a lack of understanding and knowledge by consumers, is an entirely different conversation. For now, we’ll just agree that finances can be hard. Especially for the young adult who recently graduated from college and is bound by debt, or freelance/remote workers who collect payments on a project basis but have no clear understanding of how to properly track and forecast their financial performance, financial planning can be a sore subject.

Today, I hope to at least shed some light on an overview approach for creating and automating a financial plan, as well as one particular service that is helping people (Canada only, for now) create their own financial plan in a matter of minutes. Let’s go!

Start by picking the right investment portfolio

One of the most important aspects of a financial plan is deciding where you are going to put your money, to work for you. In the most common practice, this is usually some form of a retirement plan, that is matched by an employer and meant to be withdrawn in the later years of life. However, that lifestyle might not resonate with everyone (it’s kind of an outdated model, tbh), so understanding the other types of investment portfolios and more particularly- financial products, is a crucial first step to forming your financial plan.

To choose an investment portfolio, you need to first choose which type of financial product you want to pursue. Some of the more common financial products include:

• GICS.
• Mutual Funds.
• Stocks.
• RRSP vs TFSA.

These are just a few of the ways you can have your money work for you, and the combination of these, is what constitutes a good quality investment portfolio. Much more than we have time to get into today, you can search these terms out on Google, or contact a financial advisor to help you figure out which one makes the most sense for you. If you reside in Canada, you can use the Finally application to get suggestions and explanations of the various financial portfolio types that you can create. Again- understanding which type of financial product you wish to pursue (how you wish to invest your money) will determine how your investment portfolio is built, and how it affects your overall financial plan.

Consider working with a financial consultant

If you’re ready to take your financial planning seriously, then you need to partner with someone who has years of experience and understands the various options available to you. This is especially true for beginner finance planners, who might not be aware of all the options available to them. Working with a quality financial consultant will help you better grasp your financial future for a few reasons:

• They are unbiased to your emotional preference- a bad deal is a bad deal.
• They are aware of current limitations/opportunities in the financial markets that you can take advantage of, or avoid to prevent loss.
• They can undertake financial decisions on your behalf- depending on how much authority you choose to give to them.

Financial planners are in the business of making your money work for you, in the long term. Unfortunately, because this is a full time career for these individuals, the costs can run pretty high, especially if you find a specialist who is well reputed in the industry. Basically- you pay for what you get.

There are of course, services that can help bridge the gap between you and a financial consultant, that don’t eat up your wallet. If you live in Canada, the Finally team (mentioned earlier) will generate you a custom financial plan for just $9.99/month (currently they have a limited offer of $4.99/mth), compared to most financial firms who will charge over $1000 for a financial plan, and then additional fees for every time you meet/modify your plan with them. I guess what I’m saying, is that your financial plan might benefit from being a Canadian citizen and using Finally! ;)

Automate your financial movements as much as possible

I was taught as a kid to never let services charge me automatically, but as I got older and busier, I realized that a certain amount of automation can really save time, headache, and take away that edging anxiety that might make me pull out at the last minute before a transaction. If you’re committed to financial security, you should make sure you get out of your own way and just let it do its thing. That’s why scheduling automatic deposits into your financial plan is a good idea.

Depending on which types of assets your financial plan is engaging, you might have a series of scheduled transactions between accounts (X amount to bank A, twice a month, Y amount to account B, once a month, etc). Managing these independently can be extremely taxing on time and attention, so it’s a good idea to automate them. Some platforms will actually handle all the transactions for you, so once you have a solid financial plan created with them, you can connect the necessary accounts and monitor all of the automated transactions. You can also make changes to your plan at any time, changing the automatic workflow as needed (this is something that standard firms will charge you for).

Lastly, track your financial goals on a consistent basis

It’s great to be dumping your money into an account every two weeks, but where is that effort going? Being clear on your financial goals is a fundamental part of having a good financial plan- you can sail out to sea but if you don’t know where you’re going, you’re going to end up somewhere you didn't plan. Take the time to map out your trajectory (by yourself, with a financial firm, or with a finance service), and get clear on your checkpoints along the way. Hell, you can even treat yourself when you reach certain milestones- a little positive enforcement never hurts. :)

To learn more about the Finally financial planning service, check out their home page.

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Tagged in : FinanceTech