A financial plan details your current financial situation and outlines strategies for reaching your goals. Without a plan, we often feel chaotic and unsure — constantly questioning how one financial decision will affect the success of other financial goals. For example, if we enjoy great vacations, will we be able to afford to pay for college for our children?

Having a financial plan puts your mind at ease with regard to these questions. But what exactly is contained in a financial plan?

Here are Tilly’s 11 elements of a financial plan:

  1. Budget and cash flow planning: How much money is coming in and going out? Is there a way to improve your situation by using all tax laws and thoughtful budgeting?
  2. Net worth: Do you maintain an organized list of your assets minus liabilities, which calculates your net worth?
  3. Retirement planning: How much money do I need to retire and enjoy my life? Am I saving enough and investing the savings properly for success?
  4. Insurance (safety net): Are you properly covered for unforeseen occurrences that can hamper your financial future?
  5. Emergency fund: Do you have six months’ worth of living expenses in the form of readily available cash? If not, what is your plan for getting to that point?
  6. Asset allocation: Do your investments in equities, bonds, and other investments properly balance to match your propensity for risk and still enable you to reach your financial goals?
  7. Saving for large purchases/goals: Would you like to purchase a new car or a second home? Renovate your existing home? Take future vacations? If so, what’s the savings plan for reaching those goals and when will you achieve them?
  8. Education planning: Education is expensive, and the tax rules for saving efficiently can be tricky. Are you maximizing your chances for a successful financial outcome?
  9. Debt management: If you have debts, are those debts structured properly to maximize repayment and reduce interest costs?
  10. Taxes: Tax rules are confusing. Are you minimizing tax payments with regards to how you invest, draw income, and save?
  11. Estate planning: Do you have a will, power of attorney, trusts (if necessary, and advanced healthcare directives that properly reflect how you’d like to handle things should it be necessary?

Analyzing these 11 elements for you is what Tilly loves to do. Please let us know if we can help you reach your goals and achieve peace of mind.