Personal Financial Plan Example – Plan Your Financial Future Efficiently

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Do you plan for your financial future? How can you tell that you’re on the right path financially? What are some of the elements that make a solid financial plan? Here is an example to model how you can create a personal financial plan.

Personal Financial Plan Example – Plan Your Financial Future Efficiently

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An ideal financial plan is built on a solid foundation and must meet your personal needs. In this financial plan example, we will look at the vital components that go into a thoroughly designed financial plan.

When doing personal financial planning, there is no one size fits all approach. A perfect plan should take into account your viewpoints and goals about your money.

While you should use a tool like Personal Capital to manage your money more efficiently.

You should still understand your personal financial planning goals in more detail by building something from scratch. This will help you dissect your true needs and wants with your personal finances.

What is a Financial Plan?

A financial plan is a drafted strategy to help one maintain financial health and accomplish financial goals. When you develop a financial plan, you’ll be able to control your financial situation.

A financial plan reduces money-related uncertainties and thus improves your quality of life.

Developing a personal financial plan can help you plan your future efficiently. Knowing how to make a financial plan is vital to you.

With a financial plan, you can identify the areas you are doing well and where you can improve. You can search for a personal financial plan template online.

If you are not in a position to do so or if you require any help developing it, seek a hand from a financial planner. This financial plan example will explore some of the key elements that your financial plan should address. Check out how to monitor your personal financial budget if you want to get smarter about your savings and budgeting. 

Before we look at the example, here are some of the critical tips to help you create an excellent financial plan.

See Related: 16 Helpful Pieces of Financial Advice

  • Calculate Your Net worth

A solid financial plan starts with knowing your net worth. That involves creating a balance sheet. When you want a better plan for your future, then you must take into account the current financial situation.

That includes developing a list of your current assets and liabilities. Your net worth represents true measurements of your wealth and is a good starting point when developing a financial plan.

Assets are the things that you own, including personal property items such as cash or cash equivalents and invested assets like stocks, pensions, and bonds.

Liabilities, on the other hand, include the things that you owe, including the current bills, home loans, medical debt, student loans, credit card debts, and more.

Calculating your net worth involves getting the totals of your assets and then subtracting your total liabilities from that figure.

Net worth can either be a positive or negative figure. Positive net worth is when your assets are more than your liabilities.

A negative net worth, on the other hand, means that you have more liabilities than assets.

Here is where Personal Capital can come into play. It’s completely free and it will calculate your net worth when you link all your accounts.


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  • Keep a Record of Your Finances

If you want to take charge of your future financial path, then you have to keep all the records of your finances. These include your bank statements, tax returns, insurance policy information, receipts, title deeds, wills, and contracts.

Also, they comprise of bills, retirement account statements, employee benefits statements, investment plan statements, mortgages, pay stubs, and other types of documents that are related to your personal finance life.

When you keep a record of all your finances, then it’s easier to make a financial plan.

You can use a tool like Trim to reduce all your expenses like subscriptions and your cable bill.

Trim will automatically provide recommendations on where to “trim” your expenses.

See Related: Can You Cash a Damaged Check?

  • Track Your Cashflows

Another essential component of an ideal financial plan is your cash flow statement. The cash flow statement can help you track the amount of cash and cash equivalents coming in and those going out.

Cashflow can tell you how you spend your money and the habits that have led to the current net worth.

Cashflow can either be negative or positive.

Positive cash flow means that your money at hand is increasing, and negative cash flow is the opposite.

See Related: How to Become Financially Literate

  • Create Financial Goals And Identify The Courses of Action

If you want to plan for your financial future, then you must develop a financial action plan and goals that you want to attain. That involves setting short-term, intermediate, and long-term financial goals.

You can plan for how you want your lifestyle to look like in your present moment, near future and distant future. The plan should cover every facet of your life.

Be “SMART” when setting your financial goals. That is, make sure that your goals are:

  • Specific,
  • Measurable,
  • Attainable,
  • Realistic, and
  • Time-based.

Try to include your family members or your significant other when developing your financial goals. Including your family in the plan can help you achieve your goals quickly and easily.

Even if you have a partner, there is a high likelihood that you have different views on finances. However, with proper communication and planning, you can have a joint plan that works for both of you.

When developing a financial plan, study all the options that you have as well as the future financial goals that you would like to achieve.

You need to outline how you can utilize the already existing resources, how to increase savings, and ways to generate additional income.

For example, you may look up for ways to make money online or investments that you can make that will appreciate over time like real estate.

Think of ways to create more wealth or lower your expenses.

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Consider the bigger picture and then try to segment it into small achievable goals.

Here is an example of a simple financial plan:

Personal Financial Plan Example

In this example, we’ll illustrate using a hypothetical model of a millennial couple.

This is just an illustrative post using illustrative figures, and therefore, it represents only an assumption of what could happen in a real-life situation.

Personal Financial Plan Example of “Joyce” And “Allan”

Let’s assume Allan and Joyce wants to create a financial plan. They will fill in a personal financial statement worksheet to help them understand their financial position.

Joyce and Allan are a DINK couple in their late twenties. For the last five years, this couple has not made any solid financial plan for their future.

As a DINK-couple, they have been living their life without laying down a solid financial plan. However, they have numerous investments in different assets and life insurance coverage.

Personal Financial Plan Sample

Assets Assessment

Allan is employed, and Joyce is self-employed. While Allan, a real estate investor, makes $115,000 a year, Joyce, an online entrepreneur, makes around $30,000.

Assets that they own as at now include:

Bank accounts, Cash & Cash, CDs and Money Market – $250,000

Bonds and Stocks in a brokerage account– $615,000 which is the current value, $300,000 basis

Allan’s 401(k) savings ($720,000), and his employer match is 6%

Joyce’s SEP IRA -$600,000

Allan has a car whose worth is around $150,000. The vehicle has an outstanding loan balance of $40.000. He has been with the car for the last two years and six months.

The couple lives in a home that is worth $650,000. They have taken out a $150,000 mortgage, which is at a 6.5% interest rate.

See Related: 32 Best Passive Income Ideas

Insurance Coverage

Allan and Joyce have taken life assurance coverage.

Allan has a life insurance coverage of $400,000 through work and contributes at least a premium of $250 a month.

Joyce, on the other hand, contributes to her whole life policy of $85,000 benefit on death, $30,000 cash value and $20,000 is on a basis at a $150 premium per month.

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Retirement Expenses

If Allan retires at 45 years, he’s entitled to get a pension that caters to at least 40% of his highest average salary ($140,000) for the rest of his life.

Retirement Annuity ($350,000 current value, $230,000 basis)

Allan maxes out his 401(k) account annually.

Joyce, on the other hand, is self-employed and has no retirement plan.

Joint Expenses

Both Allan and Joyce spend approximately $11,000 per month on necessities and living expenses such as entertainment, utilities, basic items like property tax, food, and other costs.

Allan’s Social Security funds will be $8,050 per month at age 60. He plans to file for his social security benefits at retirement or when eligible to receive them.

Allan and Joyce do not have a will and plans to remain childless throughout their life.

See Related: 15 Proven Ways to Increase Your Income

Personal Plan Example For Allan And Joyce

Investments Assets  
Description Total ($)
Employer Retirement plans 720,000
Individual Retirement Accounts 600,000
Tax-free and taxable accounts 865,000
Annuities and Tax-deferred products 350,000
Total Amount of Investments 2,535,000
Additional Assets  
Cash value life 30,000
Personal Assets 865,000
Total Additional Assets 895,000
Mortgage 150,000
Vehicle Loan 40,000
Total Amount of Liabilities 190,000
Couple’sNet Worth 3,240,000

This is just a hypothetical illustration to model a real-life scenario. The figures are derived as follows:

Net worth =Total Assets – Total Liabilities

Net Worth Calculation For Allan And Joyce

Description Allan Joyce Joint Total ($)
Investments Assets        
Retirement plans (Employer)        
Allan (401)k 720,000     720,000
Joyce SEP IRA   600,000   600,000
Individual Retirement Account        
Joyce Roth IRA   0   0
Tax-deferred products and Annuities        
Allan Non-qualified annuity 350,000     350,000
Tax-free and/or Taxable accounts        
Bank Accounts balance     250,000 250,000
Joint Brokerage (Bonds and Stocks)     615,000 615,000
Total Amount of Investment Assets 350,000 0 865,000 2,535,000
Additional Assets        
Personal Assets        
House     650,000 650,000
Car 150,000     150,000
Cash Value life        
Joyce’s whole life 85,000     85,000
Total Additional Assets       885,000
Car Loan 40,000     40,000
Mortgage     150,000 150,000
Total Amount of Liabilities 40,000   150,000 190,000
Net Worth       3,230,000

Suitable Courses of Action For The Couple 

This couple has a good plan, and they have secured their future financially. Given that they are a Dink (double income and no kids) couple, they stand a better chance to retire early and still live a perfect life.

Allan is employed and has job security.

On the other hand, Joyce has no income security because she is an entrepreneur.

This couple can consider investing in more assets to increase their net worth. That can reduce their portfolio risk by increasing their fixed assets over equity.

They may also need to cut their car budget from $150,000 to $20,000. Also, they can consider buying a smaller house given that they are Dinks and don’t need a big home.

If they buy a house worth 150,000, it will cut the cost by around $500,000. They can use that money to increase their savings and investments.

See Related: 5 Steps to Effective Personal Budget Monitoring

Investment Analysis And Strategy

For a better future for Allan and Joyce, they need to invest in a portfolio of investments.

They need to increase their asset allocation as well as equity portfolio to 75%. That can help them achieve their goal of retiring early.

Also, they can cut their monthly expenditure from $11, 000 to $5,000. Then allocate that money to investments, including qualified and non-qualified accounts.

They can divide their asset classes according to their tax treatment.

When they allocate about 80% of taxable income in tax-deferred accounts, they can invest the remaining 20% in qualified dividends that are usually taxed at lower gain rates.

The couple needs to find investment vehicles that will let their money work for them. That can help them increase their assets and achieve their financial goals even faster.

That can include the following:

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Insurance Strategy

Allan can take long-term care insurance and a term-life policy to shield Joyce from financial difficulties in the event he passes on before 60 years.

Buying a term life policy of $550,000 on Allan for 15 years can cover the wife in case the husband passes on earlier.

Also, they may consider taking a health cover.

See Related: 10+ Financial Statistics You Need to Know

Estate Planning

The couple needs to look for estate planning documents. Also, they need to get an attorney who will guide them in drawing up a will as well as execute a power of attorney.

A will can outline how their real estate will be divided and the trustee that can take over in case of death. 

See Related: Best Income and Expense Trackers

Retirement Planning

If the couple hopes to retire early, they can increase their retirement portfolio and investment vehicles to achieve their goals quickly.

For example, if they invest in bonds or a dividend portfolio, they will be able to earn a constant income from it in addition to their pension and retirement benefits.

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Conclusion On Financial Plan Example

When drafting a financial plan, consider your current situation and start thinking about how to make your small goals and the big goal realistic.

Focus on developing your net assets and reducing your debts.

If you allocate some of your resources into repaying your debts, you may be able to prevent some problems that could have developed later.

Consider hiring a financial adviser to help make the best financial decisions based on your financial situation.

A professional financial adviser will not be biased because he/she has no emotional attachment to your financial situation.

I hope this financial plan example has given you useful insights on how to plan your finances for a better tomorrow.

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