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Develop Your Personalized Financial Plan!

Steps to Build Plan
  Step 1 - Set goals
  Step 2 - Gather data
  Step 3 - Determine net worth
  Step 4 - Create/update your budget
  Step 5 - Define the cost of goals
  Step 6 - Assess your financial situation
  Step 7 - Develop the plan
  Step 8 - Take action
  Step 9 - Get help
Tools
  Net Worth Calculator (CNN Money)
  Net Worth Calculator (Excel)
  Average Net Worth Calculator
  Cost of Spending Calculator (RBC Centura)
  Savings Calculator (Newlywedfinances)
Forms
  Goal Worksheet (Html)
  Goal Worksheet (Excel)
  Net Worth Worksheet
Develop your financial plan

Now that you have defined your goals, developed a budget, identified the costs of your goals, and assessed your financial situation, it is time to develop your financial plan. This entails four steps:

  • Allocate amounts to the most appropriate type of savings plan(s)
  • Select the specific plan(s)
  • Define the appropriate investment vehicles within the plan(s), if applicable
  • Document your plan

Define which type of plan(s) and how much to save
When you defined your goals, you identified their respective timeframes. For those goals that you want to accomplish within the next five years, you should consider fairly safe investments, such as certificates of deposits, savings bonds or treasury bonds that mature before you need the money. For longer term savings, you definitely should consider mutual funds. For college and retirement savings, read each section carefully (hopefully you developed specific plans) and make the most appropriate choices that offer the best tax advantages.

In selecting one or more options, don't forget that most investments aren't guaranteed: If you invest in mutual funds, stocks or bonds, you can lose money. The sooner you start investing, however, the more time you'll have to ride out the inevitable market fluctuations—and the better your chances of being able to save your intended amount to accomplish your goals.

Select the specific plan
Obviously if you are choosing certificates of deposit or savings bonds, you can just visit your local bank and they will assist you in making the right choice. However, if you are selecting any of the other plans, then you have some research to do and decisions to make regarding what type of investments you want in the accounts. Although we recommend mutual funds, the specific type of fund and the specific brokerage company will be your choice. If you don't really have a clue about where to begin, talk to your family and friends, but be careful that they know what they are talking about. If you still don't know where to begin, we suggest that you contact Vanguard to review their choices.

Identify the appropriate investment vehicles within the plan
Depending on which plan you choose, it might be necessary for you to select the specific investments. If you don't know much about investing, you might consider lifestyle or age-based plans that modify the holdings over time. This provides the best option for a higher return, while minimizing risk before you actually need the money.

Document your plan
Once you have made all the decisions outlined above, make sure that you write down the details on a piece of paper. This should include your goals, how much you intend to invest, where the money is coming from (i.e. budget changes), what type of plan you are choosing for your investments, your investment allocation, etc. When you review your plan results a year from now, you may not remember exactly what your plan was, so having it documented will allow you to easily review your status and make any necessary changes.

Step 8 - Take Action Now

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