What Do I Need to Include in My Financial Plan? 6 Essential Pieces to a Financial Plan That Works

by | Apr 17, 2023

We all want to live a life of financial independence, but how do we make it happen? Unfortunately, even if you have a great job and stick to a budget, your checking account won’t magically generate the money that you need for retirement, paying for your kids’ educations, or even just to cover unexpected expenses. Rather, it takes careful planning and execution of the plan to achieve the financial security and independence you want.

So just what should go into a financial plan? Here are 6 things that you need to include to get the best results, both now and in the future.

1. Wealth Management:

Wealth management is the process of managing your wealth to achieve your financial goals while minimizing risk. Wealth management includes several aspects, such as investment management, tax planning, retirement planning, and estate planning. It’s essential to work with a financial advisor to help you develop a comprehensive wealth management plan that aligns with your financial goals, risk tolerance, and time horizon.

2. Sound Investment Strategies:

Investing is a critical component of wealth management and financial planning for the future. Sound investment strategies aim to achieve your financial goals while minimizing risk. Your investment strategy should be tailored to your specific goals.  Diversification is essential to reduce risk and maximize returns. You should consider investing in a mix of asset classes, such as stocks, bonds, and real estate.

3. Planning for the Future:

Planning for the future involves developing a comprehensive plan that encompasses your financial goals for the immediate, mid-range, and long term. The plan should include strategies for saving and investing for retirement, managing debt, and protecting your assets. It’s essential to start planning early and be consistent with your contributions. Your financial plan should be regularly reviewed and adjusted to reflect changes in your financial goals and circumstances.

4. Prioritizing Retirement Savings:

Retirement planning is an essential component of financial planning. To achieve your retirement goals, you need to prioritize your retirement savings. You should aim to contribute the maximum amount allowed to your employer-sponsored retirement plan, such as a 401(k), and consider opening an individual retirement account (IRA) to supplement your savings. The earlier you start saving for retirement, the more time your money has to grow.

5. Protecting Your Assets:

Wealth management is not just about accumulating wealth; it’s also about protecting it. You should consider purchasing insurance policies, such as life insurance and disability insurance, to protect your assets and your family’s financial future. Estate planning is also essential to ensure your assets are distributed according to your wishes. You should work with an estate planning attorney to develop an estate plan that meets your needs.

6. Regularly Reviewing and Adjusting Your Plan:

A successful financial plan requires regular review and adjustments. Your financial goals and circumstances will change over time, and your financial plan should reflect those changes. Regularly reviewing and adjusting your plan will help ensure that you stay on track to achieve your financial goals. 

Bonus: Don’t wait!

It is important to note ignoring your financial plan can have significant drawbacks. Without a plan, you may find yourself living paycheck to paycheck, unable to save for emergencies or long-term goals like retirement. You may miss out on opportunities to invest in assets that could grow your wealth over time. Ignoring your financial plan can also lead to overspending, taking on too much debt, and financial stress, which can negatively impact your physical and mental health. Ultimately, failing to plan for your financial future could leave you vulnerable to unexpected expenses or life events, making it difficult to achieve the level of financial security and freedom you desire.

Effective wealth management, sound investment strategies, and financial planning for the future are all essential components of a successful financial plan. By prioritizing your retirement savings, protecting your assets, and regularly reviewing and adjusting your plan, you can set yourself up for financial success. If you’re ready to work with a financial advisor to help you develop a comprehensive financial plan that aligns with your financial goals and circumstances, schedule a free call to learn how Bannerman Wealth’s Certifited Financial Planners can help you make the right plan for you.