If you have considered working with a financial advisor on a personal financial plan, but have held off because you weren’t sure what the plan would include, this post is for you. The confusion around what is included in a plan is understandable because each plan is (or in our opinion should be) customized. Nevertheless, we believe every personal financial plan should include the following elements at a minimum.

Personal Financial Plan

A Financial Roadmap – At its core, a personal financial plan is about achieving your financial goals. The plan should chart a clear course from where you are now to your financial goals, and outline what you need to do to achieve those goals. Those to-dos can include things like how much you need to save or when you can retire or what you might be able to spend on a financial goal. Furthermore, the roadmap should be stress-tested to minimize the chance that poor market returns can upend your plan- even if you do everything right.

A Risk Assessment – Once the core plan is in place, you should examine potential risks to the plan. If you were disabled for a time and could not work, how would your ability to meet current expenses or save for future financial goals be impacted? If you are married, would drastic changes be required financially if you or your spouse pre-deceased one another. How about simple job loss – could you stay afloat until you found a new position?

A plan should address all these risks and potentially others as well. If you are concerned that this portion of the plan is just an attempt to sell insurance, consider working with a fee only financial advisor as they sell no commissionable products and accept no referral fees. You can search for a fee only advisor in your area at the NAPFA website.

Tips for Financial Optimization – Financial optimization is the process of ensuring that your financial decisions and actions are the best choices you can make for achieving your financial goals. Optimization might involve increasing savings via identifying ways to reduce taxes or spending on insurance. It could also involve something more complex like determining your ideal asset allocation which will help maximize your long-term investment returns but not involve investing so aggressively that you don’t feel comfortable remaining invested through a bear market. Regardless of what the optimization ultimately consists of, the end result is that optimization should help you reach your financial goals sooner.

A Clear Set of Actions to Take – For every personal financial plan we do, we create a to-do list at the end of the plan regardless of whether our clients are implementing the plan on their own or working with us on a retainer basis. The to-do list makes it crystal clear what needs to be done to implement the plan, and it allows us to work with clients to track progress and ensure nothing falls between the cracks.

Every plan is different, and different types of plans – be they retirement plans, planning post-inheritance or planning after a liquidity event – will address issues in addition to those outlined above. However, regardless of client or situation, we think every plan should include these core elements. You’ll find some examples of personal financial plans here, and please contact us if you are interested in building your own financial plan with Minerva Planning Group.