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Greg MacPherson

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I was recently asked to do a couple of personal financial planning workshops for MBA students.

At first, the thought of lecturing on financial topics to MBA students was a little intimidating, but then something occurred to me. We go through 12 years of grade school, then an undergraduate degree and then possibly on to a masters degree. The whole process prepares us to go out and earn a living. At no point during this process, however, does anyone ever stop to teach us very basic financial planning concepts onwhattodowiththemoney we have earned.

Among the many other topics in the presentation, I prepared a list of 11 different rules or guidelines that will help to ensure that these MBA students go on to success with their own personal financial lives.

1. Be content now and live within your means. If you make $60,000, don’t live the life of someone who makes $70,000. You don’t need your dream house and your dream car right away.

Just because someone will lend you the money and you can make the payments, doesn’t mean it is a good idea. Be content now.

Happiness should not be something that you will achieve someday after acquiring things.

2. Pay yourself first.

Start early and be consistent.

Saving for your future shouldn’t be something you do if you happen to have money left over after the bills are paid. Treat your savings like an important bill payment every month along with your hydro bill and your mortgage payment.

3. Invest appropriately for your circumstances. This is a pretty broad statement that says you shouldn’t invest either too aggressively or conservatively. Know the difference between investing and speculating. Invest wisely and prudently.

4. Diversity. Part of investing wisely is not putting all of your eggs in one basket.

Don’t end up with all of your money in real estate. Don’t invest all of your retirement savings in stocks or all in Canada. When you do own stocks, make sure you own more than just bank shares and oil shares.

5. Be disciplined. Take emotions out of investing and stick to your plan. Do not be fickle or let the major market emotions of fear and greed change your viewpoint.

6. Protect you and your loved ones from the unexpected.

Make sure you have emergency savings or a line of credit. Have a will, living will and power of attorney prepared. Get the right type and amount of insurance (life, disability, etc.) Don’t wait until there is a health problem or a rainy day until you decide you need these things. You owe it to yourself and others.

7. Stay away from highrate debt. Use debt responsibly.

Pay credit cards off every month or don’t use them.

8. Take time to plan.

People spend more time preparing for a vacation than retirement.

9. Take full advantage of the tax rules.

You can’t evade taxes, but you are well within your rights and are expected to avoid them.

10. Communicate about money. Too many problems are caused by lack of communication between spouses or family members on the topic of money. This couldbeassimpleasmaking sure both husband and wife are aware of the finances, or it could be about making sure your estate wishes are communicated to others.

11.Usefinancialplanners and other professionals. We all have areas of expertise.

Know what yours are and delegate the rest to others.

The opinions expressed are those of the author and may not necessarily be those of Manulife Securities Incorporated, Member CIPF. Greg MacPherson BBA, CFP, FMA, CSA, FCSI is a financial advisor in the Woodstockbranch.Contacthis office with questions or to book an appointment: 328-8889.