This Is Why You Need A Financial Plan

By now, you’ve heard the term financial plan, either from your family, friends or on social media somewhere. Having a financial plan is important; however, sometimes it’s hard to know just what goes into creating a financial plan.

What Should You Include In Your Financial Plan?

A financial plan is a document that inspires you to make progress on your financial health — it basically helps guide your personal finances. It doesn’t have to be filled with in-depth details, although you will want it to be clear and touch on both your short and long-term goals. 

Keep in mind that your financial plan is not your end-all, be-all. Your goals change as you evolve and as you grow, sometimes what you want changes too. Therefore it’s imperative that you make time to check up on your financial plan often and adjust as necessary.

If you’re feeling up to it, create your own financial plan using Google Docs or Google Sheets and a free investment calculator. A financial plan just outlines your current financial situation. Your financial plan should include the following situations.

Your Present Situation

Start with where you are, then figure out where you’re headed. Your financial plan can incorporate your current finances, including your income, expenses, cash flow, debt, savings, and investments. 

It’s essential to know what tools you have to work with.

Gather information from your bank, debt, and investment statements to find applicable data about each financial item. Once you’ve gathered your list of your current financial positions, you can then figure out how to allocate your money to each of your financial goals. This is also where you’ll start working on your short term and long term goals. 

Your Future Financial Goals And How You’ll Meet Them

A financial plan is an outline for your finances’ future. Make sure to set short-term, mid-term, and long-term goals for your finances. They can include anything such as getting out of debt, creating an emergency fund and investing. 

If you need additional assistance, a financial advisor can help you set any goals you may not have thought of. 


Retirement is a huge goal for most people. Your plan should include how to fund your retirement and how you will configure the financial means to do so.

Retirement planning is more than settling on an end goal. You need to figure out how much to invest each year. Once you are retired, you then must figure out how to preserve your funds until you pass.


Another critical role in financial planning is tax planning. It essentially helps you to keep more money to then put towards your goals. It allows you to make smart decisions about your money and lessen the taxes owed over your lifetime. 

How You’re Protecting Your Finances

This is where insurance comes into play. Insurance doesn’t just protect you; it also helps protect your family and finances. Insurance that you’ll want to consider includes car insurance, homeowners insurance, renters insurance, life insurance, disability insurance, long-term care insurance, and umbrella insurance, among many other types. 

Once you’ve squared away insurance, it’s time to start estate planning. You will want to set up a will, trust, advance medical directive, or any other estate planning documents to make sure that your wishes are respected when you’re gone. 

Who Should Make A Financial Plan?

Anyone can benefit from a financial plan while ensuring their finances are in good standing as they go through life. They’re great at helping to create success in your financial future while simultaneously letting you know where your starting point is and what you need to do to get to where you want to be. 

Assess Your Current Situation

First, start keeping track of your spending and your income. Make sure to know your assets, debt and investments. Once you’ve gathered all your information, keep it current. Track your financial habits on a monthly basis. 

Make An Actionable Timeline

Once you know your starting point, that’s when the fun comes into play because you’ll know where to go from here. Try creating a timeline for your goals to help you achieve them. This will help you to stay realistic about your goals and to keep you grounded. 

For example, if you want to save $15,000 in three years, you’d have to save $417 per month. If that isn’t realistic, you’ll either have to find a way to increase your income, cut your spending, or create a more realistic goal for yourself.

Your goals could include:


  • Making an emergency fund
  • Paying off debt
  • Getting life, homeowners, umbrella, car, and other types of insurance
  • Setting up your estate planning documents
  • Investing
  • Reaching a certain investment balance


Figure out what actions you need to take to stay realistic and reach your goals. Financial planning takes time, so don’t get discouraged. You got this!


  • Cothern, Lance. “What Is A Financial Plan And Why Do You Need One?” Money Under 30, 28 Oct. 2020,


Ian Schindler