Creating a financial plan

[LMA]

I would like to see what kind of planning other people do when it comes to creating a personal financial plan. Planning is always hard because you have to look into the future and combine your present reality with where you want to be.

Is there anyone out there that has done, either by themselves or with the help of someone, a financial plan? If so, what did it consist of, what areas did you consider, what would you change/do differently?

Thanks,

[jIM_Ohio]

I would like to see what kind of planning other people do when it comes to creating a personal financial plan. Planning is always hard because you have to look into the future and combine your present reality with where you want to be.

Is there anyone out there that has done, either by themselves or with the help of someone, a financial plan? If so, what did it consist of, what areas did you consider, what would you change/do differently?

Thanks,

I have a plan for myself.

Part of plan is having a goal, and my method of planning is to focus on goal #1 then do various other things which enable the goal, or do not prevent me from reaching the goal.


Part of setting the goal is internal- you have to know what you want.
Part of setting the goal is external- there might be some financial issues you do not know, but need to accomplish at some point so the goal is achievable- this could be education, like knowing about various investment risks or knowing taxes and related knowledge, it could be a dream you did not know spouse had. It all depends- but some education along the way is probably going to happen. If you do not want to educate yourself, you will need to pay for someone's advice which knows about these things.

Another issue is timing. Some goals are short term, some are mid term, some are long term. In addition, another timing issue is some goals have a fixed date (you cannot dictate the exact day a child starts college), some happen when they happen (like paying off a mortgage) and some you can control to some degree when they happen (like retirement).

Before you put a timetable on a specific goal, you should probably have a plan framework in place. Otherwise the time constraint might force you into some bad decisions. For example if I said I want to move to Colorado next month, I might make some bad decisions to accomplish that (like quit my job or sell current house at a low price). If I change the goal to I want to move to Colorado before I retire, that goal has a lot more flexibility to it.

[snshijuptr]

You could say I have a financial plan. Mine is just a savings plan. I made a list of goals and ordered them priority. I put due dates on some of them and some of these due dates were just estimations. I tried to include everything I would NEED tosave for in my life, the big things like retirement and kids's collge (I don't currently have kids). I also included the short term stuff I could see like buying a car or saving for a house.

I then figured out how much per month I had to contribute to reach that goal by the deadline. Since they were already in order by priority, I took the amount I could save and put it into whichever goals I could until I ran out of money. Currently that is only 2 goals.

I am still in school, so I have adjusted for the massive change in income I'm facing, by adjusting goals and due dates. For example, I have resigned to the fact that I will need to work for a few months after I graduate to build up our downpayment, so even though this is our highest priority, my current goal is less than I actually need, due when I plan to graduate.

I have made most of my decisions based on personal feelings and knowledge I gained from websites like this or kiplinger, cnn money, forbes, etc. I had professional guidance in choosing retirement investments, but I am blessed to have a CFP as a brother and an accountant as a mother. I agree with Jim that you will need to do your own research, but you will also need to do your own soul searching to determine your priorities, and the priorities of your spouse.

[Debt Vigilante]

Financial plans come in increments depending where you are at in life. I have a pretty hefty amount of student loan debt to take care of right now. Over the next three or four years, most of my energy will go into paying those off - then I will be able to move onto saving and more aggressive investing for the future.

I guess my idea of a financial plan is to incrementally take steps that will get you to your final destination. Right now, before i can take any further steps, I have to pay down this school debt.

[jIM_Ohio]

Financial plans come in increments depending where you are at in life. I have a pretty hefty amount of student loan debt to take care of right now. Over the next three or four years, most of my energy will go into paying those off - then I will be able to move onto saving and more aggressive investing for the future.

I guess my idea of a financial plan is to incrementally take steps that will get you to your final destination. Right now, before i can take any further steps, I have to pay down this school debt.

I could not agree more

couple period in life with primary goal, and many times the goals "flush themselves out".

Examples of good goals:

1) Be debt free
2) Retire as early as possible
3) Have as high a net worth as possible


Many smaller goals can then be created from knowing what the clear goal is above. For example if you want to retire, and fund kids college and go on a 5 week European vacation, those wants can probably be enabled by primary goal being #1 (maybe) or #3 (definitely) depending on how you interpret things.

The order of decisions (like do I invest or pay debt off) change depending on the goal above. Some people are OK with working a long time, but do not want a lot of debt when they do it. Others want to leave workforce early, so carrying some debt to direct monies elsewhere is done.

I also remind people that focusing on short term goals usually neglects long term goals. For example many college students will state they want student loan debt gone, they want a new car, they want a house. Then they get married and need money for a wedding, then kids yadda... and eventually they "plan" their way out of saving for retirement.

So my suggested for finances is to have a clear philosophy in mind (high net worth, debt free, or retire early) because that philosophy can help solve what to spend money on for stable financial plan when their is confusion as to what to do next. For example is does not make sense (to me) to aggressively pay down student loans and then save for a down payment on a car (why pay off one debt to incur another debt?).

[jpg7n16]

I would like to see what kind of planning other people do when it comes to creating a personal financial plan. Planning is always hard because you have to look into the future and combine your present reality with where you want to be.

Is there anyone out there that has done, either by themselves or with the help of someone, a financial plan? If so, what did it consist of, what areas did you consider, what would you change/do differently?

Thanks,

I've done a bit of financial planning work - but never created a book version of a financial plan.

It's best to think of planning as a continual process, rather than a one-time event. As your life changes, you update the plan.

You should cover the following areas:
-Basics (budgeting, emergency fund, cashflow management, debt reduction)
-Investments
-Taxation
-Retirement Planning
-Employee Benefits
-Insurance
-and Estate Planning


For starter's, here are some good links from the CFP website:
Certified Financial Planner Board of Standards Inc. - Financial Planning Basics
Certified Financial Planner Board of Standards Inc. - Financial Planning Process

[disneysteve]

My financial plan at this point is pretty simple. 22% of my gross income each pay period goes to savings. There is a fixed amount that goes to a taxable investment account earmarked for retirement. There is a fixed amount that goes into our daughter's 529 plan. And there is a variable amount (my pay is not the same every week) representing the balance of the 22% that goes into our Roths in the beginning of the year and once those are maxed out, gets divided between other savings and mortgage pre-payment for the remainder of the year. Also, 50% of my wife's income goes into her 401k.

That's about it. We do also both have life insurance and I have disability insurance. We have a will and related documents.

[snafu]

DH and I have a 20 yr financial plan broken down to 5 yr segments. We go to at least 2 free financial planning seminars offered by a financial institution or community college, each year, pay attention to our investment portfolio statements and DCA [dollar cost averaging] to a mutual fund monthly.

We try to only borrow money to buy something that has potential to make money. Our 1st home was a 'starter' home and we subsequently bought larger homes as our family grew. Mindful of how amortization tables work, we made extra payments to pay off a 25 yr. mortgage in 13 years. We buy cars that are 3-5 yrs old that have significantly depreciated and take best care we can to keep them looking and operating like new.

Our value system has us seeking value for money. I don't mind buying/selling gently used items and enjoy the challenge of meal planning and food budget. My biggest failure is the income tax segment, it's w-aaay to big.

[aed343]

Investing in dividend stocks and rental properties.

Definitely, NOT planning on social security or a 401k plan.

[personalbudgetstuff]

Check out Mint.com it's an excellent site for planning with lots of tips and tools to use. Using software or the free sites out there that already have all the elements, forms etc makes it easy. You just answer the questions and fill out the forms. The first thing you need to do though is make your short, medium and long term goals.

[Personal Finace Fleur]

It seems that you are looking for a personal financial help online. Seek one online and surely you would have the best answers to your questions.

[James00]

It seems that you are looking for a personal financial help online. Seek one online and surely you would have the best answers to your questions.

[Sian]

I would like to see what kind of planning other people do when it comes to creating a personal financial plan. Planning is always hard because you have to look into the future and combine your present reality with where you want to be.

Is there anyone out there that has done, either by themselves or with the help of someone, a financial plan? If so, what did it consist of, what areas did you consider, what would you change/do differently?

Thanks,

i've set up my own plan 4 now which is just 2 become debt free. i'll meet back up with my financial adivsor within a yr so that i can decide more effective ways 4 my money 2 work 4 me.

so i'm goin in this order:

1. become debt free
2. start savin 4 retirement

altho i'll start savin 4 retirement b4 i become debt free, i'll figure out the rest later, altho i do wanna house. i just found out that u need a FICO of 630 to get a decent mortgage rate. so i'm abt 63pts from that. so i'll need 2 start savin 4 a down payment soon