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Your budget's just as important as Ottawa's

What's your budget proposal for the coming year? Not for Canada, but for you and your family.

There is plenty of focus - media coverage, third-party scrutiny and, at times, heated water cooler debates at the workplace - on the various election-platform proposals and accompanying budget modifications required to fund those promises.

So why the heck don't we get as worked up about our personal budgets?

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On average, individuals have much more power to change their financial situations than various parties' tinkering with government programs or the tax regime. Don't have money for a much-needed vacation? You know what you have to do: Sit down, reprioritize, make tradeoffs and start running a surplus. Once you pay down any high-interest debts, then you can start putting funds toward that trip.

It's not at all unlike contingent platform promises. Without going into a political analysis of proposals that are years away from being implemented, the idea of contingent promises makes a lot of sense when applied to the personal finances of the average Canadian. You should reel in discretionary expenses if you are running a deficit because, as it turns out, you can't live the good life and run a deficit for very long. It's a recipe for bankruptcy.

But this is the disconnect between federal party platforms and you: While parties make projections as to when budgets will be balanced, the average person does not. Many Canadians are not even aware of whether they are running a deficit, let alone when their personal debt will be eliminated.

Enter the financial plan. A financial plan essentially maps out how to get from point A to point B. Point A is where you stand today, and point B is where you want to be in the future. The financial-planning process involves regularly monitoring and reviewing your plan - because life happens along the way.

When you think about it, this really is not much different than the federal budget. There is an economic update every year (like an annual financial plan review) and periodically the landscape changes enough that it warrants some modifications to the long-term plans.

Nicholas Miazek, a certified financial planner with T.E. Wealth in Calgary, recently tweeted that without the "ongoing relationship to ensure implementation and adjust to changing goals, a one-off financial plan is just a pile of reading material." I couldn't agree more.

Imagine if the federal budget were treated with the same disdain and lack of attention. The country would be revolting. The fact that we don't rank our personal financial plans as important as the federal budget is just as bad.

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Preet Banerjee is a senior vice-president with Pro-Financial Asset Management. His website is

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About the Author
Personal Finance columnist

Preet Banerjee is a consultant to the financial services industry. You can follow him on twitter at  @PreetBanerjee. You can find his conflict of interest disclosure on his website. More

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