What is a financial plan? The truth is most people have never seen one. That makes it hard for someone to decide they want one; it requires a step of faith. Even those who have held a financial plan in their hands, often it was simply a print-out from financial planning software. Someone punched their numbers into a computer and it spit out some projections, graphs, and generic recommendations.
That’s not the kind of financial plans we build at Guide Financial Planning. We do use financial planning software for projections, but that is only a small part of a truly comprehensive financial plan. Trying to explain what a financial plan is can be as hard as explaining the feel of soft powder to someone who’s never seen snow, so we aren’t even going to try. We’ll show you instead.
In fact, we aren’t just going to show you one financial plan, we’re going to show you two. Every person’s situation is unique, so the financial plan for a young couple may be almost irrelevant for someone on the cusp of retirement and vice versa. As such, we created two sample financial plans to share with you; one for a young family and one for an almost-retiree.
You can download them here or read through the explanation and download them at the end of the article. We will also provide screenshots of some parts of the plans throughout the article.
Contents of a Financial Plan
There are some things that apply across the board, no matter your financial situation or season of life. We always start our plans with a financial snapshot, or net worth statement, which shows exactly where you stand at the present. It outlines everything you own and everything you owe, with concrete numbers. When you subtract what you owe from what you own, the result is your net worth. Here is what it looks like:
Net worth is important because it shows your starting point.
Before getting into the actual financial planning, we like to take a step back and thank God for each clients’ situation. Talking about money can evoke a lot of different emotions. It seems like when it comes to money, people tend to focus on their mistakes and shortcomings which elicit negative emotions such as shame and regret. We like to encourage a mental shift by focusing on the positives in a client’s situation. No matter what mistakes you have made, there are always things to thank God for in regards to your financial situation. Also, it’s important to not just focus on the numbers.
All of our financial plans next include some of our clients’ perspectives. We ask each client the following questions before building a financial plan:
- What does being a good steward mean to you?
- What is one thing that you wish you could change about your financial situation?
- What is one thing that you are especially thankful for when you think about your financial situation?
We ask these questions to get a better idea of how our clients view their finances. That helps us better understand our clients and personalize their financial plans.
The net worth statement tells us where you are, but in order to create a plan we need to know where it is you want to be. That’s where goals come into play. Our clients have goals that range from the more generic, such as developing a spending plan in retirement and saving on taxes to very specific, such as buying a $24,000 car in 2 years or determining what to do with the proceeds of a home sale.
Some facts are just important to know in financial planning. We include personal facts such as name, age, and birthdate for all family members. We also include career information, such as employer, job position, and income. We include these before jumping into the different areas of financial planning so that we can verify the information that we have based our planning on.
Cash Flow Planning
Now we start getting into real financial planning. We start by going over cash flow because that is the foundation of every financial plan. Your cash flow is what you have to work with to achieve your goals. It is important to have a solid understanding of how much money is coming in, how much money is going out, and what you have left over to work with.
For our clients that don’t have a good expense tracking or budgeting system in place, we also discuss some principles that can help make cash flow tracking simpler. We even have a spreadsheet budget template that you can download for free on our home page.
Large Purchase Planning
It is common for people to come to us with plans for large purchases that they aren’t quite sure how to fund. We help them look at their different options for funding, timing, and prioritizing their purchases. One of the big struggles with personal finance is prioritizing and balancing competing goals. For our clients who are struggling with this, we help them to lay out a concrete plan, such as the one below from one of our sample plans:
One of the greatest barriers for people in moving forward towards reaching their financial goals is debt. We address all kinds of debts from mortgages to car loans to personal loans to student debt. In fact, one of our team members is a Certified Student Loan Planner™, so he gets involved with every client who has student debt in helping them to understand their different repayment and forgiveness options and the consequences of each.
Financial Independence Planning
When people think of financial planning, they usually think of retirement planning. While we think that we're called by God to continue to serve him and others for our whole life, we also think it's important to plan financially for the likelihood of a season of life when you don't have the health, energy, or desire to continue to work for an income. That’s why we call this section Financial Independence Planning instead of Retirement Planning. Many of our clients want to live lives of purpose well into their golden years, but they want needing an income to be optional.
For those getting close to retirement age, we provide detailed analysis of multiple scenarios so that they can make an educated decision as they look to slow down. Here is an example of what that looks like:
For younger clients with multiple decades before they are looking to slow down, there are so many future unknowns that it makes detailed analysis irrelevant. For them, we do simple projections that give an estimate of their monthly income in today’s dollars in retirement based on different savings amounts and retirement ages. That way, they can understand the trade-offs of how they spend and save in the present and decide what kind of a trajectory they would like to set themselves on. Here is an example:
Social Security Planning
A major decision for people in their 60’s is when to start collecting Social Security retirement benefits. The timing for collecting benefits impacts how much a person or couple will receive for the rest of their lives, so it is important to make an educated decision.
We use special software that projects benefits based on each client’s earnings history. The software also allows us to calculate the optimal age at which to collect benefits based on different assumed dates of death for individuals and couples. Using this software, our clients get a better understanding of how to maximize their income before deciding when to start collecting Social Security benefits.
Investments are usually a key tool in helping people to achieve their long-term financial goals. When we cover investments, we start by discussing our Guide Financial Planning investment philosophy that guides our recommendations. Then we look at the big picture of a client’s portfolio and break it down by their different types of investments like this:
We then break it down even further and look at each individual account, how it is invested, and the fees involved. We make specific recommendations for each individual account based on each client’s risk tolerance, preferred allocation between stocks and bonds, the tax consequences of each account, and the available investment options. We don’t expect our clients to know each of these things, rather we walk them through how to choose an investment allocation and educate them regarding each type of investment account.
We are not accountants and do not prepare tax returns, but we do provide tax planning. We start by looking at a summary of the key numbers from the client’s most recent tax return. We try to lay them out as simply as possible:
Next, we discuss the tax implications and planning opportunities. This can include things like Roth IRA eligibility, potential to change tax brackets, whether they should be contributing to a Roth or traditional retirement account, strategic retirement withdrawals, Roth conversions, and many other things.
Charitable Giving Planning
Many of our clients are very generous. Not only do we want to commend their generosity and encourage them in it, but we also want to make sure that they are taking advantage of every tax-saving opportunity available to them related to charitable giving. We often discuss strategies like bunching giving with donor-advised funds and utilizing qualified charitable distributions.
While people are usually most interested in the offensive side of financial planning, saving and investing, the defensive side is just as important as it protects those savings and investments. When we talk about protection planning, we cover things such as:
- Emergency Funds
- Life Insurance
- Disability Insurance
- Long-Term Care Insurance
- Health Insurance
- Health Savings Accounts
- Flexible Spending Accounts
- Dental Insurance
- Vision Insurance
- Homeowners Insurance
- Renters Insurance
- Auto Insurance
- Umbrella Insurance
At Guide Financial Planning, we do not sell any insurance products but we provide analysis and recommendations on what kind of coverage each client needs and suggestions for where they could go to get coverage. We also help our clients decide between their various options, such as multiple employer-provided health insurance plans.
Helping cover the cost of college is a goal for many of our clients with children. We help them analyze their options for where and how to save and also help them determine how much they should save or how far their current savings will get them. Here is an example from our sample financial plan showing how far different savings amounts will go towards a 4-year education based on the type of school:
Estate planning is what happens with your stuff (and your minor children) if you pass away or become incapacitated. This is an area that is very important yet woefully neglected by most people. We are not attorneys and cannot prepare estate documents for our clients, but we review their current documents and summarize them and also make recommendations on which estate planning documents each client should have in place and how they can go about getting them.
Those are all of the topics that you’ll see in our sample financial plans. However, those aren’t the only things we help our clients with. Based on each client’s needs, we cover a broad array of topics. Some other topics that have shown up in our financial plans include:
- Real Estate Planning
- Clergy Housing Allowance
- Planning for Children
- Credit Card Planning
- Self-Employment Income Planning
- Missions Planning
- Leaving a Job
Our financial plans can get pretty long sometimes because we try to include enough information that a client can implement them on their own. Our sample plans are each 19 pages long. It can be overwhelming for most people to review a 19-page document and try to decipher which actions they need to take. We want to remove as many barriers to implementation and make things as simple as possible for our clients, so we conclude each plan with a Next Steps page.
For the Next Steps, we comb through the entire plan and extract every action item we recommend. Then we roughly prioritize our recommendations based on urgency. Our goal is to create a one-page checklist that can be used as a reference and guide for plan implementation. This is what it looks like:
Financial Plan Presentation
We build our financial plans with enough detail for our clients to take them and implement them on their own. We also block off two and a half hours for our plan presentation meeting just to make sure that our clients can ask as many questions as they can possibly think of in order to feel equipped and empowered. Plan presentation meetings can be done virtually over Zoom or live in our office for those in the Twin Cities area.
Even though we put a lot of time and effort into our financial plans on the front end, inevitably there are always some tweaks and changes that come up in the plan presentation meeting. We make all edits in red and send an updated copy of the financial plan within a week.
Here you can download our sample plans now that you’ve taken the time to read about them:
Now that you’ve seen our financial plans, do you want one for yourself? If so, you can schedule a free introductory call here so we can learn a little bit more about you and help you determine if a GFP financial plan is right for you.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.