I was on vacation in Hawaii last week and when meeting new people, the usual question came up, “So what do you do?” As soon as I said, “I’m a financial planner”, the inevitable followed, “What do you think about such and such a stock?”  This reminded me how closely tied financial planning is to investment selection in most people’s minds.  While millions of dollars are spent and made on selling and marketing investment products like mutual funds, most of these activities aren’t the least bit helpful to the average Canadian who is slipping behind financially and stressed about money.

Here’s a basic financial check-in that you only have to do once a year, and I guarantee that knowing what you want and getting a handle on where you stand with your money will pay better dividends than any hot stock tip:

1. Set authentic, realistic goals – Figure out what you want to achieve personally and financially in the coming year and commit to the goals in writing.

2. Check in on your net worth – Pull out your recent property assessment, your year-end bank account, investment, mortgage and loan statements and make two columns.  Write down and add up what you own (assets) in one column and what you owe (debts) in the other.  The difference between the two is your net worth and your financial starting point for the year.

3. Create a spending and savings plan – Tally up what you expect to earn after tax and deductions (your cash inflows) and what you expect to save and spend next year (cash outflows).  If your cash outflows exceed your inflows, then do whatever you can to change your spending plans – and ignore all the hype about investments, no matter how enticing the pitch sounds until you have a strong financial foundation in place.

Check out Women’s Financial Learning Centre for worksheets to help you with your annual financial check-in.

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.