I want to help you understand the elements that go into a proper financial plan. A good plan is one that is built on a solid foundation. While all good plans share similar characteristics, it is important to understand that it must be designed to meet your personal needs. The video on this page will walk you thorough the important things you need to look for. This financial plan example will help you see all of the important elements in a thoroughly designed plan. I want to make sure you are on the right path financially!
You have a very unique relationship with money. I do not believe there is a “one size fits all” approach to personal finance. If a plan does not take into account your goals and viewpoints about money, it is inappropriate. If you are in a committed relationship, it is likely that even you and your significant other have different views on financial topics! This makes proper planning and communication even more critical.
As mentioned, a great financial plan example will show the key elements you need to address. It is just like a good fitness program. You have different physical abilities than I do, but our reasons for working out are similar –we do it for our health and overall well-being. Here are the main elements that go into all good financial plans!
Financial Plan Example – Cash Management and Net Worth
A good plan starts with a balance sheet. It is the process of taking the things your own (your assets), and comparing them to what you owe (your liabilities). When you take the difference between the two, you get your net worth.
Your assets include your cash, home, investments, and any other things that have value. Your liabilities include debt, such as credit cards, mortgages, and student loans. Tracking your net worth is the true measure of wealth. If you own a million dollar home and have a million dollar mortgage with no savings, your net worth is zero. That is not what we want! Once you get an accurate view of your current net worth, you can get down to building out the plan.
Financial Plan Example – Investment Planning
You should have the strong desire to have your hard earning savings work for you. That is where a proper investment strategy comes in. This is an area that many people struggle with since it can be confusing and overwhelming. What should I invest in? How much money should I allocate for each investment? Investment Planning is where a fiduciary financial planner like myself can help. I love helping people get clear on what investments are best for them.
I will always emphasize that we have a very personal relationship with money. If you are terrified of investing in the stock market, is it appropriate to put you into a high risk, aggressive stock portfolio? If you have a goal of saving money for a house purchase in five years, what is the best place to put your money in the meantime? Should I invest in markets outside of the United States? The list goes on.
Financial Plan Example – Insurance Planning
The majority of us have circumstances that require insurance. Proper insurance planning usually involves much more than just car and homeowners’ coverage. If you have a family, you have to think about their situation if tragedy strikes. Would your loved ones be able to care for their financial needs if you were gone? If you are employed and get injured, would you have enough money to survive without proper disability insurance? It’s no fun to think about those things, but it’s such a loving provision to have insurance in place.
Another key component is proper long-term care insurance. 70 percent of people over age 65 will require some type of long-term professional care. Would you be able to afford it in retirement? Perhaps you see this situation with a parent or grandparent? Can they afford proper care at home or in a nice facility?
Financial Plan Example – Education Planning
Education costs have become such a strain on the average American family. The data since 1980 is staggering on how much the cost of college has risen since that time. Despite that fact, many parents want to be able to assist their children with their education in the future. This requires proper planning and saving.
Education planning ties right in with investment planning. The majority of education savings vehicles allow for an investment component. It is important to choose wisely when planning for the future, especially with a clear goal in mind. Starting early is critical. In the USA, the state you live in matters when it comes to education planning. Some states have different programs available that might be appropriate for you and your family.
Financial Plan Example – Tax Planning
Tax planning is something that many people overlook. Taxes are going to affect you for the rest of your life. Taxes have a significant impact now and in the future. There is an art and science behind proper tax planning. If you structure your investments properly and utilize them properly in the future, it can reduce your tax burden.
With the recent changes to the tax laws, there are more questions than answers on what the future will hold. You have to consider the tax implications on all areas of your financial plan. The financial plan example I demonstrate has a tax estimate tool that is very helpful.
Financial Plan Example – Estate Planning
Estate planning is similar to insurance in the sense that it deals with a subject we all tend to avoid. What do you want to happen to your money when you die? It is no fun to think about, but the human race has a lousy record when it comes to immortality! It is a reality you have to address.
Do you have a will in place? What about power of attorney forms and a health care proxy? The majority of Americans sadly have no will or estate plan in place. When they die, it is possible that their wishes are not met in regards to their money. Most people think estate planning is only for the wealthy. That is not true. As you gain more assets and add to your list of family and loved ones, it becomes more and more critical. You need to have an estate plan in place. It may start simple, but that is better than nothing.
Financial Plan Example – Retirement Planning
You cannot start planning for retirement early enough. Some people get serious about their financial plan when they start to think about retirement. Unfortunately, that is too late for many of them. You need to plan and invest for your future as soon as possible. Retirement will come a lot faster than you think. Besides, I am sure you see many people around you struggling and working well into their 70’s and 80’s because they cannot afford to live on just Social Security.
Retirement planning takes all of the items we covered into consideration. It is all about a strategy and building a plan based on your circumstances. Your goals are critical to proper retirement planning. What do you envision for your future? What kind of lifestyle do you want in retirement? How long do you want to work?
Watch my Financial Plan Example video and see what you need to look for when putting together a solid financial plan.
Take Action – Get Started Today!
Whether you have the desire to work with a professional or do it yourself, it is important to look at everything that goes into a proper plan. Don’t wait – please take control of your financial future.
One of the biggest motivations I had for becoming a financial advisor was to help people get started as early as possible. While it’s never too late to plan and address issues you face, the earlier you start the better. You might even feel like me and look back and think “If I only knew then what I know now”!
Now that you have seen the elements that go into a solid financial plan, let’s get you started! Sign up for your FREE account on the Right Capital platform and you can see how easy it is to start planning.
The software is very user friendly and will guide you step by step. If you would like a deeper overview on how to get started, please watch the next video and I will walk you through the process. When you see your net worth, income, and spending tracking capabilities, you are ready to take your financial fitness to the next level.