What Should a Financial Plan Actually Include?
Growing up, I remember tagging along with my grandparents to their meetings with their financial advisor. At a young age, I didn’t always understand numbers and projections, but I did understand how those conversations made my grandparents feel: secure and prepared for their future. I was instantly intrigued by the idea of helping others gain financial peace of mind.
Fast forward to today, I have now turned my passion into a career. While numbers and projections are certainly part of the job, I have learned that true financial planning is much more than investment advice and retirement dates. A financial plan should be a personalized roadmap that presents a clear path to meet your financial goals.
1. Analyzing Your Financial Situation
One of the most important factors of a good financial plan is understanding where you are. This means taking a deeper look into your situation, income, assets, debts, expenses, taxes, and career trajectory.
Most wealth management firms stop here. However, a true comprehensive plan should go beyond the numbers. Your values, money habits, family circumstances, and risk tolerance are all important pieces of the puzzle. This allows a plan to be designed with your family’s vision at the forefront, making it not only financially sound, but personally meaningful.
2. Setting Financial Goals
Setting clear, achievable goals is the key to any financial plan. Whether it’s buying a home, saving for your child’s education, or retiring early, your goals define the financial plan. It’s important to differentiate between short and long-term goals.
When crafting your goals, ensure they are SMART: Specific, Measurable, Achievable, Relevant, Time-bound. Saying “I want to retire someday” is a wish; “I want to retire at age 65 with enough income to travel 3 times a year” is a clear goal.
3. Analyzing Current and Potential Courses of Action
Once there’s a clear understanding of where you want to go, it’s time to evaluate what strategies to take to get you there. Are you saving enough? Do you have your investments allocated appropriately for your time horizons and risk tolerance? What tax-saving opportunities you’re missing?
This is where the “What-If” scenarios come into play. Modeling different paths helps visualize possible outcomes before making any major decisions. Sometimes the changes are small; other times they require big shifts. Either way, it’s about getting you on the right track for your personal situation.
4. Developing the Financial Plan
This is where the fun begins! A good financial plan will address every core area of your financial life.
A. Insurance
Making sure your family is properly protected from any financial strains is a non-negotiable. This includes reviewing life, disability, health, and property insurance to ensure there are no gaps or unnecessary coverage.
B. Investments
Your investment allocation should match your goals, time horizon, and risk tolerance. Diversification, tax efficiency, and cost-effective investing ensure your money is working toward your goals just as much as you are.
C. Taxes
Coordinating your investment and retirement strategies with tax planning can mean big savings now or in the future. Lowering your tax burden through retirement contributions, strategic withdrawals, and tax-loss harvesting are all key elements of a financial plan.
D. Estate Planning
Estate planning goes beyond your basic will. Appropriate documents ensure your wishes are clear and your family is provided for. Establishing or reviewing your Will, Power of Attorney, Medical Directive, beneficiary designations, and account titling will ensure that everything is in order.
5. Implementing the Plan
A plan is only as good as the action you take on it. Having a clear list of action items will help guide you through implementation. Coordinating with other professionals, such as CPAs, estate attorneys, and insurance brokers, will help everything run smoothly.
6. Monitoring the Plan
Life is constantly changing, and your financial plan should too. Annual review meetings will help you stay on top of your plan and adjust for life events, new goals, and changing priorities.
A comprehensive financial plan is more than numbers and projections. It’s about creating peace of mind while providing a clear and personal path forward. Would you like to make your own financial plan today? Schedule a complimentary meeting with Wiser Wealth Management.
Grace Kennedy
Financial Planning Associate, Wiser Wealth Management
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