What exactly is a Financial Plan?
When you hear the term Financial Plan, a budget might be the first thing than comes to mind. However, a financial plan is so much more. It is a comprehensive document or strategy for how you manage your money, finances, debt, investments and beyond! While this can at first appear to be overwhelming an intimidating, a good financial planner will guide your through the entire process step-by-step at a comfortable place that allows you to feel confident in the information and help you feel more in control of your finances. You don't have to put together an entire financial plan in one sitting either. In fact, you are more likely to follow through with your financial plan if it is something that build over time. This allows you to gain confidence in each area of the plan before moving on to the next step.
What are the components of a Financial Plan?
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What exactly all goes into the Financial Planning Process?
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There are seven major components to a Financial Plan:
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How should I prepare ahead of my first meeting with a Financial Planner?
- Ensure you have access to a personal finance application like Rocket Money, Honeydue, Empower, or Credit Karma (all of these have free options that would work). The most important thing is to have it linked to your checking and savings accounts and to make sure it is tracking and categorizing your income and expenses. Preferably, it would help to have at least three months of income and expenses to determine average income and spending.
- Either through the personal finance application or separately, compile your current open loans and the following information:
- Monthly payment
- Outstanding balance
- Interest rate
- Loan term/length (when the loan will be paid off)
- Either through the personal finance application or separately, compile your current investment accounts (retirement and non-retirement) and their current balances. If you are able to include what those accounts invest in that is great, but if not we can review that later.
- A summary of your current insurance coverage (renters/homeowners, health, dental, life, short- and/or long-term disability, etc.)
What does a first meeting look like?
You as the client drive the pace and tempo of this process. We start with the basic information, and move through the process of building your financial plan as you feel comfortable and confident to move forward!
In our first meeting, we will start by reviewing the financial planning components and process. Next we will identify your goals and any questions that you would like to have a answer to at the end of our first meeting.
Then, we use the automated reports from a personal finance application like Rocket Money to develop a budget based on your current income and expenses. This provides a baseline from which we can work together to build your full financial plan based on your goals. Your new budget will then help provide a starting point for designing your "retirement" budget and help with planning your retirement savings strategies.
We will also discuss your current insurance coverage and employee benefits. Throughout this process we will also discuss ways to automate your finance and put things on auto-pilot to help you stick with your plans.
Finally, we will talk about when to schedule a follow up meeting to check in on your new budget and how well that is working, and then continue to work on your savings and investing goals, as well as talk about appropriate estate planning.
In our first meeting, we will start by reviewing the financial planning components and process. Next we will identify your goals and any questions that you would like to have a answer to at the end of our first meeting.
Then, we use the automated reports from a personal finance application like Rocket Money to develop a budget based on your current income and expenses. This provides a baseline from which we can work together to build your full financial plan based on your goals. Your new budget will then help provide a starting point for designing your "retirement" budget and help with planning your retirement savings strategies.
We will also discuss your current insurance coverage and employee benefits. Throughout this process we will also discuss ways to automate your finance and put things on auto-pilot to help you stick with your plans.
Finally, we will talk about when to schedule a follow up meeting to check in on your new budget and how well that is working, and then continue to work on your savings and investing goals, as well as talk about appropriate estate planning.