Whose Wind Is It Anyway?

Sometimes we get caught in another person’s plan, which often happens because we do not take the time to make our own plans. Seneca said, “If a man knows not what harbor he seeks, any wind is the right wind.”

The very same thing applies to your financial life – without a plan, you are letting yourself be open to following another person’s plan or getting involved in financial situations you did not give any thought to making. The following example illustrates the importance of making a plan.

A friend calls you today to tell you about a great vacation deal to a lovely island for an amazing price. You did not plan on taking a trip this year and as such; do not have any money set aside for a vacation. However, this deal is too good to pass.

You know that you should definitely tell your friend “NO THIS IS NOT IN MY SPENDING PLAN” but you agree to meet her and proceed to book the vacation together. Your friend has been planning for this trip for over a year and has more than enough set aside in her vacation account.

The trip is fantastic and worth every penny paid…so you think. Now that you are back, the bills start arriving with the first one due a couple of weeks later. With no plan in place, you begin making the minimum payments. One year later and still no plan in place, you continue to make just the minimum payments on this unplanned vacation you took last year.

Your friend calls to ask whether you want to go away again since you had such a wonderful time together twelve months ago. This time you decide to ask your friend how she can afford to go away every year for a vacation. Your friend replies very nonchalantly, “Oh, I have a vacation account. I have always had one. I also have a Registered Retirement Saving Plan, as well as a Tax Free Savings account and I just opened an account to begin saving for my first home.” With that you swallow and very carefully say, “I can’t go with you this year because I am still paying off the vacation from last year.” Your friend is shocked to find out that you do not have a plan for your financial future. Embarrassed, you quickly think of an excuse to get off the phone. At that moment, a light bulb turns on in your head. You realize, for the first time, that you have allowed yourself to get caught up in other people’s plans. You have been following the gang…wherever they lead.

You decide to do the math to find out how long it will take you to pay off the remainder of your debt by continuing to make just the minimum payments.

You owed $1,200.00 at 18.50% interest and you have been paying $50.00 monthly. To your dismay you find out it will cost $281.09 in interest and 2 years and 6 months to pay it off. You vow then and there that you will never let this happen to you again. You realize that the savings you got for the deal on the vacation was much less than the interest you will be paying.

You call your friend and ask how she knew what to do and which accounts to choose. She explained that she met with a Financial Advisor at her bank but first she had to think about what she wanted and when. She said she had a plan which she took with her to the bank. Her financial advisor then helped her set the plan in action for her financial future. With this newly acquired knowledge from your friend, you decide to spend some time working on your plan. You then visit your bank to seek the proper guidance.

This is a small amount of money but it is the most common of the times that we let ourselves be caught in someone else’s plan or like Seneca said, not knowing what harbor you seek any where the winds blows will be the right place which can end up costing you so much more.

I urge anyone who is reading this and who does not have financial goals to take some time to make a plan for your financial future. Begin by asking yourself what you want and when, being careful to go over the plan several times. Your plan will require work, frequent revisions and you will need to work on it diligently and often. When you are sure this is what you want to accomplish in your financial life, then make a trip to your financial institution to make an appointment with a Financial Planner. (Remember, there will be no cost to meet with your Financial Planner at the bank.) When you arrive for the appointment, be on time and come with the financial goals you have set for your self. Take notes and ask questions, especially if you do not understand what the Financial Planner is saying. Ask them to explain or repeat themselves in ordinary terms and not use bank jargon.

Good luck and let me know how it goes!

Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com