how to create a financial plan
certain steps are needed to create a financial plan in addition to calculating your net worth determining your cash flow and establishing financial goals as outlined above here are additional plan elements steps to include decide whether you ll create your financial plan on your own or with the help of a licensed financial planner while you can certainly build a financial plan a financial pro can help ensure that your plan covers all the essentials based on what your cash flow allows start setting aside enough money in a liquid account to cover all your expenses for at least 6 months preferably for twelve if you find yourself without income due to unexpected events if you have debt the faster and more effectively that you can eliminate it the better for the growth of your savings your standard of living and the achievement of specific financial objectives make it a habit to cut expenses whenever possible so that you can add to your savings in addition stay on top of expenses that you know you ll have such as taxes so you always meet those obligations on time your financial well being can be affected when accidents health problems or the death of loved ones strike plan to put into place the appropriate insurance coverage that will protect your financial security at such times this coverage can include home property health auto disability personal liability and life insurance take part in a retirement plan at work that automatically deducts contributions from your paycheck and plan to maximize your tax advantaged investing with a personal ira if and when your income allows also consider how you might allocate any other available income to a taxable investment account that can add to your net worth over time your plan for investing should take into account your investment risk tolerance and future income needs address the goal of reducing your income taxes with tax deductions tax credits tax loss harvesting and any other opportunities that are legally available to taxpayers it s important to make arrangements for the benefit and protection of your heirs with an estate plan the details will depend on your stage in life and whether you re married have children or have other legacy goals revisit your plan at least yearly on your own or with a financial professional and more often if a change in circumstances affects your financial situation keep it working efficiently and effectively by adjusting it as needed 