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Financial Planning in Canada: What a Plan Covers and Where to Start

Updated

A financial plan describes where your money stands today, where you want it to be, and the steps that lead from one to the other. The Canadian Investment Regulatory Organization (CIRO) describes a plan as taking in your net worth, your income and spending, a budget, saving and investing, taxes, retirement and your estate, and in some cases insurance. You can put one together yourself or work on it with a professional. This page goes through those pieces in the order CIRO’s guide sets out its steps, links the pages on this site that cover each one, and lists this hub’s pages for measuring where you stand and for finding help.

On this page: What a plan is · What it covers · Where you stand · Getting help · Reviewing a plan and life events

What is a financial plan?

A plan starts from your present situation and your goals, then maps the steps toward those goals. A budget is part of it, not the whole: CIRO lists budgeting as one area alongside net worth, saving, investing, taxes and retirement. No two plans look alike, since no two people’s finances are the same.

If you write your own, GetSmarterAboutMoney.ca, the investor site of the Ontario Securities Commission, says there’s no need to plan everything at once: you can begin with the goals that matter most to you and add the rest piece by piece.

When a financial planning professional writes the plan, FP Canada describes it as a written document that analyses your day-to-day finances (income, spending, what you own and what you owe) and at least two more areas, such as investments, retirement, insurance or tax. FP Canada says the document also records its assumptions and an action plan stating what is to be done, by whom and by when.

What does a financial plan cover, and in what order?

The pieces below follow the order of the steps in CIRO’s guide to beginning a plan: your current situation and goals first, then a budget, then investments and insurance, then retirement and estate planning. This page puts debt and an emergency fund next to the budget: CIRO’s budget step includes paying down debt, and its guide lists an emergency fund among the ways a plan manages risk.

  1. Where you stand. CIRO’s first step is to gather what you earn, spend, own and owe, drawing on bank statements, investment accounts, insurance policies and tax returns. What you own minus what you owe is your net worth; the net worth calculator explains what to count and how to value it.
  2. Cash flow and an emergency fund. A budget follows the money coming in and going out and divides it among day-to-day costs, saving, investing and paying down debt. CIRO names an emergency fund, along with insurance, as one way a plan deals with risks such as a lost income or an unexpected medical bill. The budgeting hub covers budgets, and how much to keep in an emergency fund covers the fund.
  3. Debt. GetSmarterAboutMoney.ca counts paying down debt among the parts of your finances a plan covers. Ways to pay it down, and help when it gets hard to manage, are in debt strategies.
  4. Protection. CIRO’s guide includes checking whether your insurance protects you against risks such as health problems, damage to property or a loss of income; FP Canada calls this area insurance and risk management, protection against losses from accidents, illness or death. Life, disability, home and car coverage are in the insurance section.
  5. Saving, investing and taxes. CIRO’s guide looks at whether your investments fit your goals and how much risk you can take, and FP Canada counts tax planning, your tax bill now and later, as its own area. The CRA’s page on registered plans lists, among others, the registered retirement savings plan (RRSP), the tax-free savings account (TFSA), the first home savings account (FHSA) and the registered education savings plan (RESP). Each has its own hub: TFSA, RRSP, FHSA and RESP, with FHSA vs TFSA vs RRSP comparing three of them; taxes have their own section.
  6. Retirement. This step estimates what you will need in retirement and how you plan to get there. See retirement planning and how much you need to retire.
  7. Estate. CIRO’s guide includes making or updating a will and powers of attorney, so your estate is handled the way you want. Wills, powers of attorney, probate and executors are covered in estate planning.

How do your finances compare with other Canadians?

Two kinds of pages in this hub help here: tools to work out your own numbers, and Canadian figures to set them beside.

Measure

Compare

Also in this hub: the benefit payment dates calendar, with federal and provincial payment dates in one place.

Do you need help to make a plan?

A canada.ca guide notes that free guides can help you start a plan of your own, or you can consult a certified financial planner. Three pages in this hub cover that choice:

For complex estate or tax questions, CIRO’s guide points to legal and tax professionals as well.

When is a plan reviewed, and where are the life-event pages?

CIRO describes financial planning as ongoing rather than a one-time task, and suggests reassessing a plan at least once a year or when a major life event happens, such as marriage, a baby or a career change. These pages cover the money side of particular events:

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