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Financial Planning


A comprehensive evaluation of an investor's current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans.

Most individuals work in conjunction with an investment or tax professional and use current net worth, tax liabilities, asset allocation, and future retirement and estate plans in developing the plan. These will be used along with estimates of asset growth to determine if a person's financial goals can be met in the future, or what steps need to be taken to ensure that they are.


While there is no specific template for a financial plan, most licensed professionals will include knowledge and considerations of the client's future life goals, future wealth transfer plans and future expense levels. Extrapolated asset values will determine whether the client has sufficient funds to meet future needs.

A good financial plan can alert an investor to changes that must be made to ensure a smooth transition through life's financial phases, such as decreasing spending or changing asset allocation. Financial plans should also be fluid, with occasional updates when financial changes occur.

Examining Your Current Financial Situation

The first step toward planning your financial future is understanding where you are today. The following is a couple of things we figure out about your current financial situation as we start your personal financial plan!

Cash Flow: Paying bills on time, saving, and avoiding reliance on credit is only possible if you spend less than you earn. (Okay, spending a little more one month won’t kill you, but if it happens on a regular basis, it will be hard to avoid financial problems.) We will use a Cash Flow Worksheet to list your income and expenses. (Don’t forget to include savings.) To get as accurate figures as possible, we will use a Tracking Worksheet to track your spending. (If your income is irregular, it is a good idea to track that too.) We will then determine a monthly amount for periodic income and expenses, such as vacation.

If you have a negative cash flow (i.e., your expenses exceed your income) or you would like to save more than you are currently able to, we'll take a close look at the Cash Flow Worksheet and determine what you can change. Can you get a part-time job? Rent out a room in your house? Cut back on dining out? Skip the daily $4 mocha latte? Get a cheaper cable package or cut your land-line phone? Increasing income can be difficult, but most people have some expenses they can trim. Together, we will honestly assess what is a necessity and what isn’t.

Net Worth: Your net worth is the value of your assets (things you own, like a house or car) minus your liabilities (monetary obligations to others, such as a mortgage or car loan). We will fill out a Net Worth Worksheet to see where you currently stand.

Your net worth should be positive (meaning you own more than you owe) and increase over time. One simple way to increase your net worth is to pay down your debt. You can also build your net worth by putting your money in assets that typically increase over time (or at the very least hold their value) and minimizing spending and borrowing for assets that decrease in value. If you put $5,000 in a savings account, at the end of the year, you will have more than that because you are paid interest. On the other hand, if you buy a $20,000 car, it will probably be worth less at the end of the year because most cars depreciate in value as soon as you leave the lot. If you borrowed money to purchase the car, the amount owed on the loan could be greater than the car’s value. (Of course, you may need a car to get around, but does it have to be a top-of the line new car or will a used or basic new car do the trick?)

Setting Goals

Identifying clear, achievable goals is a crucial part of anyone’s financial plan. A financial goal is the amount of money needed for a specific purchase or service at a definite date. Making goals precise allows you to determine how much you need to set aside each month and track your progress.

There are three types of goals: short-term, mid-term, and long-term. We like to say that short-term goals are achieved in under a year, mid-term in one to five years, and long-term in five years or more. Emergency savings, vacations, and electronics are typical short-term goals. A down payment for a house is a common mid-term goal. Long-term goals may include saving for retirement and your child’s higher education.

We'll write these goals down to help you determine the timeline for your goals and the amount of money you’ll need to regularly set aside in order to reach them. You may find the numbers daunting or not realistic based on your current financial situation but we will work through this together as a team. As mentioned above, you may be able to make adjustments to your income and/or expenses to free up cash for savings. If not, determine your priorities and save for the most important goals first. If your roof is leaking and your house is overrun with termites, saving for home repairs is probably more important than saving for a new television!