• Alex Mizerski

How to build a financial plan

Building a financial plan might be one of the hardest things you will do. While creating a plan of any sort can be difficult, a financial plan can be particularly daunting. Our family has created a skeleton version of a financial plan and it has helped guide our money making decisions along the way. As a result, our finances are quite healthy (we added $250k to our net worth in the last 3 years!).

I'm not saying that creating a financial plan is for everyone, or that everyone should make a financial plan. I'm saying that if you have it in you, and planning is something that you can bear then, create a financial plan, a one/two/three/four/five/fifty-year financial plan, and see what comes of it. If you are up for it then you just might be ready to take the next step in owning your financial future.

What is a financial plan?

To get us started let's define what a financial plan is. At its most basic level, a financial plan is a plan telling you how your money is going to be spent over a specified period of time. The period of time is defined by you and the level of detail is also defined by you.

You can create a financial plan for next week, next month, or for the next 10 years. The most common parts of a financial plan include the following:

  • Your income

  • Your expenses

  • Savings

  • Financial goals (401k, college savings plan, saving for a car/trip/etc)

  • Debt

  • Estate planning

Again, your financial plan can be as simple or as complicated as you would like. There is no "right" definition of a financial plan

Why build a financial plan?

You should build a financial plan for so many reasons, and it all ties back to the loose definition of a financial plan. You should build a plan if you want or need to buy a new car soon. You should build a plan if you want to buy a home, or go to college, or pay for someone else's college, or just creating a plan around your food spending.

A good financial plan is something that you can stick with, guides your behavior, and improves your financial life in the process. These are all the reasons you should build a financial plan.

How to build a financial plan

If you are interested in getting your own built then start by answering the questions below.

What are your goals? - Be specific

Do you want to invest?

Do you want insurance? Do you need insurance?

Do you need an advisor?

Once you have all these questions answered you can start to put together your financial plan. If you decide you want an advisor they can certainly help you build out your plan.

What's next?

Tell me about your financial plan, ask me for help building yours, or ignore all of this and go on about your life. No matter your choice I fully support you and good luck!

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