Incorporated businesses and not-for-profits have annual general meetings to ensure their finances are in order.
In today’s uncertain economic climate, debt settlement advisor Mike Wright of Mike Wright and Associates Inc., Licensed Insolvency Trustee, stresses the importance of annual financial planning meetings for households and small businesses. With the rising cost of living and higher interest rates, more than ever Wright recommends a comprehensive review of financial health at least once a year. His practice focuses on debt restructuring for consumers and small businesses through consumer proposals or bankruptcy, and he believes that advance planning is what separates households and small business who feel they are in control of their finances and are financially successful, from those who struggle.
“It’s a good time to check in on some fundamentals, make sure the big pieces of the financial plan are still sound and that 2024 is going to be set up for success,” Wright says.
Wright’s recommendation for the annual financial self-check involves a holistic examination of a client’s financial status, starting with creating a personal balance sheet or net worth statement to examine assets and debts. He recommends annual credit report checks, available for free online, to monitor credit health.
The review extends to an analysis of 2023’s spending patterns, facilitating the creation of a realistic budget for 2024. Wright highlights the importance of planning for regular and irregular expenses, including milestone events and holidays, to avoid financial strain.
Emergency funds are another critical focus. Wright suggests a baseline of two months’ worth of expenses as a safety net, advising clients to assess and adjust this amount based on their current situation.
Debt repayment strategies should also be discussed. Wright believes in having an “exit strategy” for debts, ensuring clients remain on track with their repayment plans. He encourages consulting with a licensed insolvency trustee, like himself, or a non-profit credit counselling service if repayment becomes challenging.
“The cold, hard reality of financial management is none of us has as much money as we would like to have or would be able to spend if it was unlimited,” Wright says. “So we all have to make choices. And that’s where the pre-planning comes into it. So people can look at what is available in the budget and how much they can allocate to start paying for some of these extra things if they do have new elements to add to their financial plan.
“Normally, the best advice we can give is the time to start planning was yesterday. Slow and steady wins the race, so if we put it off until the funds are available, we may never get there.”
Wright says clients need to be proactive with their tax planning, recommending the annual downloading and safekeeping of necessary documents for tax purposes. He also suggests updating personal information with relevant institutions to ensure smooth processing.
Insurance coverage, retirement savings and education savings plans form another critical aspect of Wright's financial check-in. He guides clients to evaluate whether they have adequate coverage and are on track with their long-term financial goals.
Estate planning is another area Wright emphasizes. He urges clients to consider wills, powers of attorney, and funeral arrangements, especially in the face of life-changing events like marriage, divorce or the birth of children.
Recognizing that financial constraints can be a barrier, Wright notes that not all steps need to be taken simultaneously. He encourages starting with small, manageable steps, utilizing opportunities like tax refunds or three-paycheque months to build towards financial goals.
For new clients considering a consumer proposal or bankruptcy to reduce debts, Wright offers free initial consultations to assess financial situations and establish debt repayment goals. He believes in transparency regarding costs and services, allowing clients to make informed decisions about their debt restructuring options and that other professionals offering complimentary financial services like insurance, investing, and estate planning services do the same.
To set up a meeting with Mike Wright and Associates Inc., Licensed Insolvency Trustee, to discuss debt settlement options, visit its website here.
This article is written by or on behalf of the sponsoring client and does not necessarily reflect the views of Castanet.