Financial Planning Pyramid

Financial Planning Pyramid

The Financial Planning Pyramid is a great tool for getting a handle on your financial situation. It helps illustrate a lot of my priorities for clients. The general idea is that items at the bottom of the pyramid support the ones further up. We wouldn't want to start dabbling in more speculative, non-liquid investments before addressing fundamental needs like having an emergency fund and proper insurance in place.


Financial Planning Pyramid


Applying the Financial Planning Pyramid

Okay, so what's a situation that could cause a problem if you don't follow these priorities? Consider the case of a big health challenge that means you're not able to earn income. Let's say you had only been focused on investing without proper insurance coverage in place. One of the first places you might to go support your income would be your retirement savings in your TFSA or RRSP.

In that case, it's better to have the money to pay your bills than not, but now your years of diligent retirement planning & saving have gone out the window.

But say you had sufficient living benefits coverage like disability insurance and critical illness insurance in place to step in and support your lifestyle. In that case, you'd still be on track for the level of comfort you'd hoped for in your later years.

This is just one example. If you'd like a more detailed, no-cost look at your situation please drop me a line.


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