How To Make A Financial Plan
What is financial planning and and why should you do it?
Before we ‘make’ anything, we need to understand what financial planning is and how it can help you. First off, let’s be clear: you don’t need a certain amount of money for financial planning to be beneficial to you. You can start with ANY amount of money in the bank, and any amount of money coming in.
A financial plan can look a whole lot of different ways, but essentially it’s a brief overview of your current financial situation – it’s a visual and mathematical representation of categorizing and separating your income (from a job, from a business, etc.), expenses (daily, recurring things, and the fun spurges that keep you going), assets (things that you fully own that are worth value), and liabilities (credit card debt, other types of loans you are paying off for cards, mortgages, etc. Setting well-defined strategies for short-term and long-term financial goals by making projections or trying to limit yourself to a goal budget. A financial plan helps you by minimizing risk by planning for unexpected events and uncertainties.
How Investment Strategies & Estate Plans Fit Into Financial Planning
Sometimes financial planning firms will also offer to help you create an investment strategy (for all that extra cash you have laying around now that youre budgeting!) Investment strategies will consider factors like risk tolerance, time periods for investment, and financial objectives, all that will help with meeting your financial goals. Financial planners will also help you clarify your retirement needs and create a savings strategy, aligning their investment recommendations with your goals for retirement.t
A full financial planning process will often involve elements of estate planning (ie; the technical stuff that happens to your assets after you die) as well. Although financial planners aren’t always attorneys, they can help review any legal estate planning documents you have in place (think: wills) for insights into ways to tweak your documents to take full advantage of the tax implications of inheritance. It’s important to keep in mind that even attorneys might not have the latest tax knowledge under their belt; it’s pretty key to get input from a finance person on these documents as well as your lawyer in order to make sure all angles are considered.
What is financial planning for a business?
Financial planning can look a bit different for a business structure;. Let’s look at what is financial planning for a business.
Financial planning for a business, just like it is for personal purposes, is crucial and helps minimize risks and optimize strategic business goals. Along with making a plan to use financial resources to reach the short term and long term goals of the organization, you can also use a business financial plan to to make decisions for a strategic path for the company.
Financial plans act as a tool that allows businesses to adapt to newer strategies to cope with changing market conditions and any unexpected challenges. By using detailed breakdowns of assets, expense, and expected revenue, businesses can identify opportunities, minimize risks, and overcome the complexities of an ever changing world Adetailed financial blueprint motivates businesses to navigate issues and take advantage of growth opportunities as they come along.
How to Make a Financial Plan: Step By Step
If you’re interested in the process of how to make a financial plan but don’t know where to start, consider registering for our course on “Holistic Financial Planning”. This sliding-scale course will walk you through the step-by-step of developing a Holistic Financial Plan (using a free template and free software) that will:
- Give you a deeper understanding of your income & expenses so you can plan and organize appropriately
- Help you to find a version of financial management that works for you
- Enable you to set goals that feel more reachable because they’re informed by real numbers!
Let’s be real – often, business finances and personal finances overlap. For this reason, this tool is designed especially for entrepreneurs. Its adaptable nature, however, allows it to be used by any individual looking to consciously cultivate their finances. Build a personal plan, a business plan, or both – you’ll leave with a road map that works for your unique situation, reflecting your goals, values, and priorities.
Remember, a financial plan is dynamic, so regular reviews and adjustments are essential to keep it aligned with your evolving financial circumstances and goals. We can help you do that, too, with financial coaching & accountability opportunities!
