Comprehensive Financial Planning
What should be in your comprehensive financial plan?
Your plan should address each of the following areas, preferably in this order, although you will alter it to match your needs:
Your goals
Go back to your goals and take the most important to you at present. Your plan will aim to achieve these over time. These goals may change in the future as your circumstances change, and as you achieve them, you will no doubt add more.
Assumptions & attitudes
Bring together all your assumptions on how the future may change your plan, using measures like inflation and investment growth.
Income
Revisit your income sources now, and use the assumptions you made to project forwards each year, calculating how much you will pay in tax and what you will be left with. This will be the basis of the future plans. Dont forget to include an assumption for how your income producing assets will grow and therefore how the income from these assets will be factored into your calculations.
Expenditure
Extrapolate how your expenses will change over time as inflation increases costs, and some outgoings change (get paid off or increase for other reasons).
Assets
Use your calculations to work out how your assets will grow in value using your assumptions, and also how you will add to these by saving any excess income into various investments.
Liabilities
Work out how you will reduce your liabilities by paying them off over time, and how this will affect your expenditure.
Emergency funds
You should aim to put aside at least 3-6 months worth of expenses in an instant access account.