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Personal Financial
ManagementBringing It All Together
-Bhavesh Patel, CGA
(416) 522 - 3234
Personal Finance Workshops
A. Budgeting and Debt
Reduction
B. Saving and Investing
C. Personal Financial
Management
D. Stewardship
E. Charitable Giving
Our mission today
• Financial planning• Overcoming the fear factor!
• Building a solid foundation • Where to go for more help
People don’t plan to fail…..they fail to plan!
• Only 28% of households have a comprehensive financial plan
• Only 19% express an interest in having a financial plan• Don’t understand the value • Don’t know what a comprehensive plan is• Believe the cost of having such a plan
developed by a financial professional is high
How do we create a financial plan?
• Define financial planning
• Structure of a sound financial plan
• Commit to action • Who can help?
What is financial planning?1. Where you are today?
• Examine your personal finances
2. Where you want to go? • Define short and long-term goals
3. Creating the plan to get you from today into tomorrow
• Action steps to reach those goals
Your plan will move with you through the various life stages
Life cycle planning periods
retirement
Pre-retirementPeak
accumulation
mid career
early career
Life cycles
Disp
osab
le in
com
e
Key components of a plan
Speculation
Financial Goals & Priorities
Protecting Financial Security
Key components of a planSpeculation
Financial Goals & Priorities
Protecting Financial Security
Key components of a plan
Speculation
Financial Goals & Priorities
Protecting Financial Security
Savings and Investments for
Retirement Goals, Education, etc.
Long Term Care to preserve dignity and family ties at old
age (stream of income) Disability Insurance for income preservation while living (stream of income)
Life Insurance for income and estate protection on death (lump-sum)
Risk Management
Life insuranceFinancial protection for:Your family and loved ones
• Can supplement lost income
• Provide funding for child’s education
• Debt relief – mortgage, credit cards
• Money for funeral and final expenses and taxes
Critical Illness Facts
73,000 died of Heart
Disease and Stroke in
2003
159,900 new cases of cancer
diagnosed and 72,700 deaths in
2007
Over 70,000 heart attacks
in Canada each year
Statistics Canada, Canadian Cancer Society, Heart and Stroke Foundation
The need – advances in medicine
We are more likely to survive critical illnesses:• Today 59% of people diagnosed with cancer
will survive as compared to 1 in 3 in the 1960’s • 80% of heart attack victims survive when
admitted to hospital• 75% of stroke victims will survive the initial
event, but 60% will be left with a disability
We are survivors!Sources: Statistics Canada; Canadian Cancer Society; Heart and Stroke Foundation of Canada
Critical Illness InsurancePay the bills and more!
• Provides you with options • Allows you to focus on getting well• Eliminates money worries • Return of premium option
Wills and Power of Attorney• A Will helps ensure your personal
wishes are followed. If you own a personal asset or have children, you should have a Will.
• A property power of attorney will make financial decisions on your behalf.
• A healthcare power of attorney will take care of your healthcare needs.
Truth about savings and debtTrend #1: Less Saving • Savings rates: 20.2% in the 1982 to 1.2% in 2005• Half of all Canadians have less than $2500 in
savings
Trend #2: More Debt• Canadians spend, on average 127% of their
income every year• Money is the #1 cause of marital conflict
Source: www.crowncanada.ca / Statistics Canada
Key components of a plan
Speculation
Financial Goals & Priorities
Protecting Financial Security
Wealth creation
• The Power of Time
• The Power of Compounding
• The Importance of Rate of Return
Rule of 72• Dramatic effect of time, compounding and rate of return.• Your money will approximately DOUBLE at a point in time
determined by dividing 72 by the percent interest you earn.
Values are for illustrative purposes only and may be subject to applicable taxes.
Time, Compounding and Return
7.2
912
1836
0 10 20 30 40
Your Money Will Double In…Years
2%
4%
6%8%10%72
/ %
Inte
rest
Who Has More at 65?• Investor “A” invests
$1,000/year from age 40 to 50 and stops to let it grow
or• Investor “B” invests
$1,000/year from age 50 to 65?
Putting money to work
05000
1000015000200002500030000350004000045000
Investor A Investor B
Assumes 7% Annual Return Inside an RRSP
Invested Grew To
Retirement savings
• 25% have died• 19% have incomes less than $10,000• 49% have incomes of $10,000 - $35,000• 7% have incomes of over $35,000
Most people begin their career with the hope of a good retirement. However by age 65:
19%
25%7%
49%
Source – National Council of Welfare, Canada Customs and Revenue Agency, 2001
If you fail to plan…• Inefficient use of resources• Risk of not meeting financial objectives• Unprepared for the storms of life• Pay higher taxes than necessary• Delay retirement; live on less money• May be difficult fulfilling God’s purpose
for your life
Commit to actionConcrete steps for action
• Set goals – spiritual and practical
• Assess current situation• Develop action plans • Put your plan into action • Track your progress• Celebrate your successes
Who can help?
“Plans fail for lack of counsel, but with many advisors they succeed”
Want to go deeper?
To review or start your plan contact
Bhavesh Patel, CGACertified General Accountant
Financial Advisor(416) 522 - 3234