Insights
Periodic insights from our Investment and Private Client Teams on a broad range of investment and advice-related topics
Published by the Private Client Team at KJ Harrison Investors – Sarah Bull, Partner & Portfolio Manager
Spring is a time for starting fresh. If you are like many Canadians around this time of year, you’re rolling up our sleeves—and maybe, at long last, even putting on shorts—and puttering around the house and the yard, decluttering and cleaning and generally getting your life sorted in preparation for the welcome warmth of summer.
I would urge you to take the same approach to your financial life. Because, like a house or a yard, preparing your financial future is not a matter of “set it and forget it.” Our circumstances, our priorities, our goals and our outlook change, just like the seasons, and even if you have been diligent in developing a strategic wealth management plan in the past, it needs to be dusted off, revisited and revised now and again. Spring is the perfect time to take on this task—not just because you are likely doing the same thing with your personal space, but also because it is tax season, meaning you will already have to pay attention to your finances and probably consult your accounting advisor.
As with most projects, this one can be much more satisfying and effective if you have a clear plan of attack. Here are a few pointers:
1. Take a structured approach. Undertake a review of your financial health in a step-by-step manner. Start with your goals: Where do you want to be financially
this year, in five years, in 20 years? If you’re thinking about retirement—and unless you are very young, you should be—decide how, where and with whom you want to spend it. Don’t ignore the “soft stuff.” Your goals do not have to be all about money. Do you hope to travel the world? Devote more time to philanthropy? Live near your grandchildren? Remember, goals can change—that’s life—so be honest with yourself and be prepared to let go of yesterday’s dreams if you no longer have them.
Everything else about your financial plan flows from goals; once you have set the finish line, you can think about how you will get there. Maybe the best approach is saving more of your income, or redirecting your investment portfolio, or exploring the purchase of a second home, or establishing a trust. Your financial strategies will depend first and foremost on realistic, clear and detailed goal-setting.
2. Assess your cash flow. Simply put, you cannot get to where you want to go if you do not know where you are. For most people, even very high-net-worth individuals and families, reviewing income and expenses from time to time can be a valuable reality check. Looking at your cash flow will help you decide on the best way to reach your financial goals. It can tell you if you have more money to save and invest than you perhaps thought you did, or if it’s time to trim those unnecessary expenses you have let get out of hand. A simple spreadsheet can work wonders in illustrating the money coming in and the money going out, but many financial institutions have apps and other tools to make it even simpler. Use them.
3. Review your estate plan and ensure your documents are in order. As I’ve written before, there are three essential estate planning documents that should be revisited every year: your will, and your powers of attorney for property and for care. When it comes to your will, the first and most important question is, do you have one? Unfortunately, most Canadians don’t. In fact, half of Canadian adults reported not having a will in a 2023 survey by the Angus Reid Institute. This can leave your loved ones facing a complicated mess of probate proceedings—and family tensions—when you pass.
If you do have a will, good for you. But is it up to date? Are your beneficiaries still the ones you want? Has anything changed about your estate—bigger, smaller, new assets? Is your executor still available and the person you want to handle the distribution of your estate?
These are important questions, so take some time to review your will and make sure it reflects your circumstances and your wishes. Then go through the same process for your power of attorney for care and power of attorney for property documents.
4. Safeguard your digital assets. Perhaps it is not an altogether good thing, but much of modern life is lived on our phones and laptops and other digital devices. As part of your financial spring cleaning, it can be a good idea to also clean up that part of your life. Many people regularly review the apps they subscribe to and delete the ones they don’t use anymore—I think that is a good practice, not least because it will save some money. Do not neglect security, either. Cybersecurity experts say you should change your passwords every three months. My guess is that more than a few of us have never done it. If not, especially when it comes to banking passwords, you are running a big risk. So, now is the time.
5. Develop tangible next steps/action items. Refreshing your financial plan does not do much good if you just pop it in a drawer and forget about it until next year. Once you have set your goals, it is time to take action. Think about steps you can take towards reaching your objectives tomorrow, next week, next month, next quarter, next year and over the next five years. Then write those steps down and encourage yourself to keep track of how you are doing. That will not only keep you honest, but also give you the satisfaction of knowing that you are taking control of your financial life.
If all that sounds like work—well, it is. But refreshing your financial plan does not have to be onerous. Break the task down into achievable steps and give yourself time to make sure you are making the right decisions for you. And remember, it’s important. The greatest impediment to financial security is lack of planning.
Even beyond that, it is not all about money. Just like keeping a tidy home or tending a healthy garden, getting your financial house in order and regularly revisiting your plan can have a big fringe benefit: it gives you peace of mind.
