How to Organize a Financial Plan

Developing a financial plan can help you stay within budget, achieve the standard of living you seek for your family and build a retirement fund. Even if you hire a financial planner to work out details of the plan, knowing how to organize a financial plan is something you can pass on to your kids. Of the adults surveyed in 2010 by the National Foundation for Credit Counseling, 41 percent learned about finances from their parents.

Step 1

Write your financial goals on a notebook page. Articulate your goals in detail so you can clearly understand and envision what it is you are trying to achieve. Quantify your goals so you will know exactly what is needed to reach them. Create a staircase on a second piece of notebook paper to help you visualize ways in which your smaller, short-term goals can lead to your end goal.

Step 2

Review your bank statement and calculate your cash flow by subtracting your monthly expenses from your monthly income. Brainstorm how to increase your cash flow by reducing your monthly expenses. Pay off high-interest debt, credit card debt or expensive monthly payments with the help of a credit counselor or on your own. Do not invest until your major debts have been paid.

Step 3

Peruse your investment statement to categorize your investments into insurance, short-term investments, long-term investments and retirement savings. Consider purchasing life and health insurance before investing to protect your family and ensure their well-being in case you are injured or die. Accumulate six to eight months of liquid savings in case of emergency before building other assets.

Step 4

Refer to your goal calculation. Use online financial calculators to determine the average yield of the investments you want. Use your web browser to research investments to find what appeals to you. Determine which investments will allow you to reach your goals. Reassess your investment strategy if your investments fall short of your goal amount.

Step 5

Invest in long-term investments like bonds and mutual funds if you are seeking financial security with moderate returns over a long period. Choose short-term investments like annuities, stock trading and certificates of deposit for a variety of yield options over a shorter period. Diversify high-yield investments with safer, more steady streams of income to protect against significant losses. Refrain from investing in high-yield investments if you are seeking financial security or are saving for retirement.

Step 6

Monitor your investments regularly. Compare stocks and mutual funds to their benchmarks. Sell underperforming investments and reinvest the money to maintain your portfolio. Swap high-yield investments for safer investments as your needs shift with age. Invest in short-term safe investments to boost last-minute yield as you near retirement. Review your financial plan every year to ensure that your financial plan still represents your needs and is on track to meeting your goals.

Items you will need

  • Bank statements
  • Investment statements

Tip

  • If you are not comfortable with developing your own financial plan, seek guidance from a financial adviser or planner. Make sure the financial adviser or planner is billing at an hourly rate unless you want to purchase financial products from her company.

Photo Credits

  • Creatas/Creatas/Getty Images

About the Author

Nicole Manuel is a finance and economics writer with a degree in economics and more than six years of professional writing experience. She is also a Certified Professional Coach (CPC) known as The Personal Eco-nomist, who specializes in helping people live healthy, abundant lives on a budget.

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