The 5 Pillars of Financial Health
There are numerous philosophies when it comes to financial planning, so aligning yourself with a professional whose philosophy is in sync with your financial goals and dreams is paramount. There is no cookie cutter approach to a financial plan - each plan can look completely different, yet can get you to your desired outcome.
In my opinion, there are 5 pillars to address for a solid financial plan. Here are the 5 key area's I look at:
1. Cash Flow
This is the first foundational area, or pillar, I address with my clients. If you don't have the money to invest in your financial plan, we will both end up frustrated wanting something we can't have. I look at this area in depth and create a customized cash flow plan for my clients, address their current spending and saving money mindsets, clean up money leaks and cash flow inefficiencies...and on average, wind up finding them hundreds of dollars each month to now be able to afford that plan! For more cash flow planning information that I do with my clients click here.
2. Debt Repayment
So often, debt repayment is not an area that is addressed before a financial plan is recommended. In my opinion, you need to have a solid debt repayment plan before fully understanding how many dollars you actually have left to allocate outside of paying bills and repaying that debt. With my clients, we have a goal of repaying debt as quickly as possible without sacrificing your Starbucks Latte's and manicures...if that is something you find joy from! I believe there is more to life than counting calories and paying bills and I help show my clients how to achieve this.
3. Protecting Assets
This pillar of a financial plan is VITAL to make sure your plan isn't built on a house of cards, and would crumble if income stops or is interrupted. If you should die too soon, or become sick or injured during your working years, you could decimate your finances. Making sure you protect your assets with insurance, using the money we found by creating a cash flow plan and debt repayment strategy, is a key area you should address. In my opinion, unless you are independently wealthy and don't need another dollar in your bank account for the rest of your life, you need to look at addressing this area and protecting your assets, income and health with insurance.
4. Saving for the future
Imagine this...you have a cash flow plan that finally works for your lifestyle and spending habits, a debt repayment strategy, protection in case your income is interrupted due to death, illness or injury....now the fun begins! Saving for your future! This 4th pillar addresses your future self - what do you picture in your retirement years? Is it travel? Time with loved ones spent a family cottage? What about your children's education - have you started to save for that? Whatever your vision of the future is, you need a plan to help get you there.
5. Building wealth
The last pillar, builds on the foundation you already have. Do you want to leave a legacy? How do you want to leave that legacy? What is your vision for future generations? Addressing this final pillar is unique to each individual and can often be a time of true reflection of the kind of memory you want to leave behind. This area is often not possible without the work in the previous 4 areas...each pillar strengthening the plan as we go along.
Those 5 pillars yield a solid financial plan, one you can trust in to achieve your financial goals in the time frame you envision it. Even if you feel like this might be out of reach, your financial story is one you can have control over. You might just need some help getting there!
If you are interested in any of these area's, please book into my calendar for a FREE 30 mins consultation by clicking here: Book my FREE call
Yours in financial health,
Heidi
