Thursday, November 21, 2019

The Missing Link

Even if you are not a football fan, you can relate to heartbreak.  Without a doubt, heartbreak manifests itself at the end of a football season.  It comes when a team doesn’t cross the goal line to score points in their favor.  After Sunday’s Western CFL Final, there is no scarcity of questions about “What happened” when our much-loved Saskatchewan Roughriders faced off against the Winnipeg Blue Bombers.  Three different times they were well-positioned for a touchdown and couldn’t cross that elusive line to score big even from only one and a half yard away.  You can also question, “How does this happen?”  The situation is tense; nerves are rattled; and confusion arises. The worst part is the number of attempts and the time on the game clock is limited.  You probably can see where I am going with this.

You may not realize it but we are playing the same kind of game.  It’s slightly different because we are not tossing or carrying a football across the goal line but we do have a goal in mind.  We are always playing and trying to score.  We make big plays to purchase a home, save for retirement, and pay down debt.  Guess what?  We have only so much time on our clock to do this.

I love the fact that the Canadian Football League (CFL) wraps up in November, the same month designated as Financial Literacy Month.  The connection between playing football and handling your finances is about creating winning strategies.  Neither of these are easy feats.  We need a well-designed game plan to execute winning drives to win football games; and we need well-designed financial plans to secure our future retirements.  Both require plans of action. 

Les Brown, a motivational speaker and author said, “Your goals are the roadmaps that guide you and show you what is possible for your life.”  With this said, once we know what we want, we need the roadmap.   Ironically, a first crucial step in the financial planning process is “Establish objectives.”  Then, we require the appropriate direction to reach our objectives (goals).  

In an article, How to Overcome Behavioural Barriers to Reach Your Goals, Dilip Soman, Canada Research Chair in Behavioural Sciences and Economics Director, explained there’s a common behavioural disconnect in the financial planning process:  even though you’re eager to reach your goals, it can be hard to motivate yourself to write a financial plan.

“For many,” he says, “retirement is far into the future and the link between getting a financial plan made and their future well-being is tenuous.”

No one should question whether they can or cannot retire at a future date.  The answer shows up in a financial plan. Much like a football playbook draws up winning plays where coaches and players run the play, test for results, and tweak if necessary, a financial plan resembles its twin.   

Although retirement may seem far off in the future for some or may feel right around the corner for others, the question hangs in the air whether we will be able to make this happen.  Will we be able to financially cross the goal line from working to retirement?  Do we have the link to help us make that decision? 

The opening chapter of 10 things I wish someone had told me about retirement presents an excerpt from the website of Insurance-Canada.

“Canadians need to realize that retirement is not a 20 – or 30-year vacation,” says Monique Tremblay, senior vice president of Savings and Segregated Funds for Desjardins Financial Security. “People need to change their behaviours and start planning for retirement as soon as possible – earlier than the average age of 35 years old.  It is understandable that the extent of the planning and savings must be in relation to the needs and financial capacity, but a simple plan is better than no plan at all,” adds Tremblay.  “Retirement planning is not just about RRSP contributions.  People also need to consider the social aspects of retirement and how that impacts their finances as well.” 

My takeaway is we can’t fool ourselves into believing we can stop working because the calendar tells us it’s time.  We have reached the magic age.  We need to take a hard look at our potential retirement income to ensure we are not heartbroken when we discover we can’t afford to retire. We can take a lesson from the Riders' painful lost. 

In case you did not know, the Saskatchewan Roughriders faced the Winnipeg Blue Bombers last year in the Western CFL Final. Same teams. Same playoff game.  The Bombers came up with a win then to earn a trip to the Grey Cup but lost in the final showdown.  This year, Winnipeg pushed through their adversities and will try again for the prestigious title.  For the Riders, both losses evidently will cause them to look at their playbook and hunt for the missing link. Over these two years, changes were made to the coaching staff and the players but one thing stayed constant, the loyalty of the Rider fans.  Their support for their team is the best in the CFL.  When you think about your greatest fan, look no further than your CERTIFIED FINANCIAL PLANNER® professional to cheer and coach you onto a financial win.   Your missing link is the creation of your playbook, your financial plan.  Don’t you think it’s time you had one?  

Thursday, November 7, 2019

I Think I’ll Sit This One Out.

Medicine Hat Minor Hockey

It’s a tough conversation.  We create a fa├žade to show others we are living the good life.  As winter approaches (in fact it’s already arrived) the conversation around the office water cooler is happening.

               “So where are you going this winter for your holiday?”

Some people try to outdo each other with their winter destination plans or may do their best to pretend they can do so.  Others don’t have to pretend; they have saved money for their holiday. The concern is for those who haven’t. Their vacation getaway will be charged to their credit card to prove they can keep up the pace.

When will there be a time for the barriers to be removed and simply be honest? 

             “Our situation is a little tight now.  Our kids are in hockey; we need to purchase winter tires for the car; and our monthly utility bills have gone through the roof. And then there’s Christmas.”

               “I think we will sit this one out ~~no winter vacation for us this year.”   

Being honest about our financial circumstances isn’t something we practise very well.  No one likes to share their story about how tight their situation is but statistically new results are proving this is reality. The Globe and Mail printed this headline last week “As household debt reaches precarious levels, Canadians need to take control of their financial lives.    The article staged this important comment: The capacity to make smart decisions about personal finance is a critical skill for everyone. 

Maybe it's time to stop pretending and be realistic.  If we can't do things, buy things, go places, the best solution is stop and sit this out.  If we need someone to give us permission or better yet to lay the blame on someone else, just say, "My financial planner said, 'No more spending!'" 

Do you remember the days when your parents had to tell you, "No!  This is for your own good!"  Here's your chance.  Go ahead and assign responsibility to someone else especially if you can't take the  ridicule from family, friends, and coworkers about not "doing", "having", or "going" because it will cost money. 

The month of November is Financial Literacy Month.  This opportunity allows us to assess our reality and stop pretending. Playing charades about living the dream isn’t fun when we are drowning in debt.  If more people were honest, then more people would admit, “Me too!”    Peace of mind comes with having a plan of action to meet your short and long term plans. Our lists are individually unique and may be long. A young family with children–sporting activities and education plans.  A retired couple living on a fixed income–managing day-to-day living expenses and medical costs. Everyone--escalating utility and grocery bills.  

Borrowing the following message from the Globe and Mail article gives a plan of action. This can begin by encouraging open and honest conversations about our relationship with money. It’s an important way we can keep financial literacy top-of-mind with Canadians, and build the kind of financially security we all want, and our economy needs.

My stance: Everyone prefers to hide their personal struggles but that's not always the best strategy.  When we need help, the solution is ideally found from the wisdom of professionals.  Let's take a chance on them to see our way through our trouble spots.  This is one time you don't want to sit out.  This is the time you want to be part of the action.