Taking stock and planning for the future

To plan for the future, you need to have a realistic idea of where your finances stand right now and which major life events may be coming up.

Where do you stand?

Net worth and cash flow are two important tools that financial advisors use to help people take stock of their finances. You can use them too!

To figure out your net worth:

  1. List the dollar value of everything you own, such as your house, car, jewellery, bank accounts, investments (such as stocks, bonds, mutual funds, and guaranteed investment certificates [GICs]), the cash value of your life insurance policies, and any money owed to you (e.g., tax refund).
  2. Then list the dollar amounts of everything you owe, such as mortgages, lines of credit, credit card debt, and car loans.
  3. Now subtract what you owe from what you own. The result is your net worth.

To figure out your cash flow:

  1. List the amount of money you have coming in (you can calculate this on a monthly or yearly basis). This may include employment income, disability income, unemployment insurance income, pension income, and money from income-producing investments.
  2. Next, list the dollar amounts of all of your expenses (again, this can be monthly or yearly expenses, but make sure you use the same time frame as you did for the money you have coming in).
  3. Now subtract your expenses from your income; this is your cash flow.

Calculate your net worth and cash flow each year to help you keep track of your financial health over time. If your net worth is growing and your cash flow is positive, that's a good sign. If not, then it may be time to reexamine your financial plan or get help from a financial advisor.

Planning for the future

Consider the major life events that may affect your financial situation in the future (e.g., needing to leave the work force, medical expenses, putting children through school). MS is an unpredictable condition, so you can't know for sure exactly what will happen. But you can speak to your doctor and your local MS society to find out what kinds of changes you should plan for in the future, such as medical costs and the need to leave the workforce, change jobs, or move to part-time work.

Take a look at your net worth and cash flow to see if you will have the money you need to deal with these life events. If not, you may want to look for other sources of income (see "Helping to balance the balance sheet") or talk to a financial advisor (see "Time to call a financial advisor?") to help you make a financial plan.

Getting professional advice

Depending on your individual situation, financial planning can be a complex process. You may want to get help from a financial advisor, at least to get started. To learn more, see "Time to call a financial advisor?"

All material copyright MediResource Inc. 1996 – 2021. Terms and conditions of use. The contents herein are for informational purposes only. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition. Source: www.medbroadcast.com/healthfeature/gethealthfeature/MS-Financial-Planning-Basics