Consider your financial plan as a plane taking you to places you want to go financially in life.
You are the pilot; you may have a co-pilot (Spouse) and some passengers (Dependents).
You also have a ground crew that you communicate with and command to store your fuel where you will need it.
The fuel is money of course, and whatever your ground crew leaves you after their fees, it will be overseen by Mr. Market and Ms. Realestate who manage the reserves (Accounts and Investments). Do you borrow money to plan this adventure? Mr. Creditor will oversee your Loans.
You determine your family's flight path. These are your expected Incomes and your expected Expenses. If your income is greater than expenses, the plane can fly and transport its leftover fuel to your reserves. If income is less than expenses, it needs to withdraw from the reserves in order to keep flying. You must never run out of fuel!
To fly the plane, you have a throttle (Automatic savings and withdrawals). The throttle allows you to force deposits and withdrawals from fuel reserves.
You also have a joystick (Priorities), which allows you to more gently guide deposits and withdrawals from fuel reserves as required.
Your Dashboard shows all these things. But it doesn’t show you everything:
There will also be the Tax and the Inflation headwinds along the way, but you can also run into some Benefits tailwinds (like OAS, CPP, credits and grants).
Now you are set up for yourself and your passengers. Your dashboard says go. Are you ready to fly that plane?
No of course not! If you run out of fuel while flying, you crash!
You need a flight simulator. That’s the MoneyReadyApp TIME MACHINE.
You stay safely on the ground and launch the plane like a drone.
It will quickly collect all of the information on the winds and the fuel reserves along its journey so you can see if the plan works. You can change the plan and launch the plane again and see if works better or worse.
You can create worst case scenarios to make sure you would still be ok.
Once satisfied, you and your family can get on that plane for a bit, following the plan and enjoying the ride.
The problem is that although your instructions to Mr. Creditor, Mr. Market and Ms. Realestate are clear, they are not reliable attendants and tend to do just what they want. The winds can also change at any time with very little warning. Also, now that humans are on and flying the plane, anything can happen.
So, you get everyone off the plane once in awhile or when you need to, recalibrate and simulate again to prepare for the next leg of the journey.