Your liabilities may include credit card debt, student debt, an outstanding mortgage, and a car loan. Your assets may include a home and a car, some cash in the bank, and anything else you own of value. The first step in the creation of a financial plan involves getting together a lot of bits of paper or, more likely these days, cutting and pasting numbers from various web-based accounts into a document or spreadsheet. The plan starts with a calculation of the person’s current net worth and cash flow and ends with a strategy. The plan should be comprehensive, but also highly individualized to reflect the individual’s personal and family situation, risk tolerance, and future expectations. A financial plan documents an individual’s long-term financial goals and creates a strategy for achieving them.

A financial plan may be created independently or with the help of a certified financial planner.

Financial plans can stretch over years, months or decades, depending on the time horizon of your goals. These plans may revolve around consolidating debt, opening bank or brokerage accounts, establishing a savings regime or building an investment plan. They can also lend some insight as to if you’re on track to meet your financial goals or if you need to make adjustments to your spending. A financial plan identifies, organizes and prioritizes your financial goals, then outlines the steps you need to take to achieve them. A financial plan is a document containing a person’s current money situation and long-term monetary goals, as well as strategies to achieve those goals.

Download financial planning