Where to Begin with a Financial Plan

by | Jun 15, 2021 | Smart Financial Tips

A map can help you find your way—but only if you know where you’re headed and where you came from. The same is true for a financial plan. A financial plan is unique to each person and provides an overview of your entire financial picture, your goals, and strategies to achieve those goals. It helps you connect the dots between where you are now and where you want to be.

You can’t get started without first defining your goals and knowing exactly where you’re starting from.

Your current financial picture

Financial planning cannot begin without a clear picture of your current finances. This includes understanding your:

  • Cash flow
  • Taxes
  • Investments
  • Insurance
  • Estate plan

Is your retirement on track? Are your savings enough to cover an emergency? Each of these details impacts your financial plan and whether you’re set up for the financial future you want.

It is important to start the process early in life. Don’t wait until you’re close to (or already in) retirement to begin a financial plan.

Short-term goal setting

Maybe you’re not going to retire and move to a lake house in the next five years. Still, your short-term goals are a vital part of your overall financial plan.

Short-term goals look different for everyone and depend on your current financial picture.  However, here are some common starting points:

  • Establishing an emergency fund – You never know when an emergency such as a large home repair or even loss of your job may happen. It’s important to have funds set aside so that you are prepared for these possibilities ahead of time and are not relying on funds invested for the long term (and thus can be more volatile in the short term) or using high interest credit to cover expenses. People who lost their jobs in March 2020 during the pandemic without an emergency fund might have had to take money out of their investment accounts when it was doing very poorly and then missed out on the subsequent recovery.
  • Purchase life insurance – If you have anyone dependent on your income, such as children or a spouse who may not earn as much, it’s important to evaluate your insurance coverage. While no one likes to think about an untimely death, you want to make sure your family will be okay if something were to happen to you.
  • Pay off debt – Review the interest rate on any debt you have and try to develop a plan to pay off all the high-interest debt. Not all debt is bad; if you have a low interest mortgage, that probably makes sense to keep, depending on your financial situation. But any high interest balances, such as credit card balances, should be reviewed.

Long-term goal setting

Most people have some idea of what the future looks like. You might know, for example, that you want enough saved to pay for your children’s education, buy a second home, or retire early. However, many people don’t take the time to sit down and think about how much money it would take them to get there. Ask yourself questions like the following:

  • What kind of a life do I want to live in retirement?
  • How much do I need annually to achieve that goal?
  • How much income can I expect in retirement?
  • Do I need to set aside money for any dependents?

A clear picture of your financial goals takes time and careful consideration.  This is also something that should be periodically reviewed; as your life changes you may realize your goals change as well.

Need help getting started?

Team Hewins is your guide to financial wellbeing. Contact our team to get started on a financial plan that’s personalized to you.



Team  Hewins,  LLC  (“Team  Hewins”)  is  an  SEC  registered  investment  adviser;  however,  such  registration  does  not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas.