The financial plan is a living document. It is not supposed to add more emotional burden but to manage the risks and alleviate future anxiety by guiding us to achieve our goals. Most of our life goals need a solid financial foundation.
Here is an example. She already has a financial plan set up for her retirement. Recently, there are big changes in her life. She needs to spend significant amount of money for her health. Therefore, she cannot contribute the same amount to RRSP as planned. She felt stressed by falling behind and worried that she can’t achieve her retirement goals.
My personal take is that health care is the priority now. It is even more foundational than personal finance. Of course, these two impact each other. It is certainly a good idea to look for more affordable health care options of good quality. However, we have to spend the money for health. Hence, we should adjust our short-term budget to lower the contribution amount to RRSP. The stress of not meeting the original contribution target might do even more harm mentally and physically. A budget or a plan is not something set-in stone. Life just loves throws curve balls at us. That is out of our control. We need to lower the demand we put on ourselves for a short while to maintain the balance. That is a very reasonable approach.
At the same time, make sure to set aside cash of at least 3 to 6-month living expense as emergency fund just in case we have to take time off from work to take care of our health. Be very careful of using line of credit for emergency fund because the interest rate is historically high now.
When we get better with our health, we can adjust our budget to increase the contribution to RRSP. She might need to work a bit longer or contribute more later by finding ways to earn more and spend less. Those are all options that can be explored when she is in good health. Or she might not need to do that at all if the investment turns out to perform better than expected in the long term.
Wish you all good health physically and mentally in this tough time of lingering pandemic, ranging inflation, and market turmoil.
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