Personal Financial Plan Example in 2022

How to Plan Your Financial Future Efficiently

Planning is vital in the life of mankind. When you wake up early in the morning, you plan your day. At every beginning of the week, month, year, you propose a plan of all you want to do. Also, people make plans on short term and long-term basis. For any individual that desires to succeed in life, planning is vital in their activities. That said, planning cut across all levels. An example is planning for your financial activities. Either you have a family of your own or not, you can live a successful life when you propose a short and long-term financial plan. With the detailed plan, you can achieve a lot of things - ranging from capital projects to simple utility needs. Apart from accomplishing your business goals, financial planning also help you have a rest of mind by the time you retire from your job because you would have got enough money to sustain yourself and your family. With the importance of financial plans to our economic future, it becomes essential to discuss how you can plan for your financial future. Therefore, today, I will be telling you how best you can plan your financial future and also give you a personal financial plan example.

What is Financial Planning

Financial planning is an excellent strategy that assists individuals to reduce burdens about money, maintain their financial health, support their current need, and assist them in accomplishing their long-term financial goals. Having a detailed financial plan is vital to maintaining and improving your financial status. It also helps you to carry out an assessment intermittently on your financial expenses and how well you have been able to manage your finances. With a detailed financial plan, you can have a financial roadmap to manage and improve the standard of living of your family tremendously.

How You Can Create a Financial Plan

How You Can Create a Financial Plan
How You Can Create a Financial Plan

1. Know Your Net Worth

If you desire to create a financial plan, you need to know your current net worth. You can do this by creating a balance sheet for your proposed expenses and income. Knowing your net worth is important because it gives you a brilliant idea of how to draft a workable plan. While drafting the balance sheet, ensure it contains your current liabilities and assets. Your liabilities are those things you owe. Examples are credit card debts, loans, bills, medical debts, and many more. Also, your assets are those things you possess. Examples are your invested assets like bonds and stocks, and personal properties like cash, houses, and many more. You can know your net worth by deducting your liabilities from your assets. If the assets are more than your liabilities, you have sound financial health. However, if liabilities are more than assets, then you are in financial debt.

2. Document Your Finances

For those that desire to control their future financial roadmap, they need to document their financial records. The financial records you need to keep are your purchase receipts, utility bills, tax returns, bank statements, insurance policy information, contract, and employee benefit statements. Also, you can keep your retirement account statements, pay stubs, mortgages, wills, and many more. With these records, you can know whether you will need to reduce your expenses or not. Peradventure, you need to reduce your subscriptions and other expenses, the Trim app can do that for you.

3. Monitor Your Cashflow

While creating a good financial plan, you need to take note of your net income and the amount of money you spend per month. When you monitor your cash flow, you will be able to know if your cash flow is negative or positive. For instance, negative cash flow means there is no money in your savings, while a positive cash flow means that you have a reasonable sum of money in your savings. With positive cash flow, you can know how to spend your money, the kind of project you can prosecute, and the workable method of increasing your savings.

4. Set Your Financial Goals

Now that you have an idea of your cash flow, assets, liabilities, and many more, you can set your financial goals. This can be for short-term, intermediate, or long-term. When setting the financial goals, ensure it is specific, measurable, realistic, and time-based. The financial goals assist you in identifying what you need and how you will be able to achieve it within a specific period. For instance, you can set a goal on how you can buy a house or car within five years. Having this in mind will assist you in coming up with a detailed plan on how to achieve it. While creating the plan, you can include your partner or family in the plan to make it achievable.

A Personal Financial Plan Example

A Personal Financial Plan Example
A Personal Financial Plan Example

In this section, I will be giving you an illustration of how you can create a personal financial plan by using a couple's name as a hypothetical example. Also, note that the figures given in this section are based on assumptions and not real.

Financial Plan Example of "Lisa" And "Frank"

Assuming that Lisa and Frank are a couple married for six years and are yet to have a personal financial plan and financial statement worksheet that can assist them in understanding their financial status. Now that they are in their early thirties, they are willing to have a solid financial plan that will serve as a financial roadmap for their future financial expenses and savings. The financial plan of this couple can be planned as discussed in this section

1. Their Asset Assessment

Frank is employed in a real estate agency and earns $120,000 yearly, while Lisa is an online entrepreneur that up to $50,000. Their assets include

 Bonds and stocks of $620,000 with a current value of $350,000

 The Money Market, Cash & Cash, and bank account they have is $280,000

 Frank has a car valued at about $160,000. He still has an outstanding loan of $50,000 on the car.

 Frank's 401(k) savings ($800,000) while Lisa's SEP-IRA is $650,000

 Both Lisa and Frank lives in a home valued at $650,000. they are gotten a $160,000 mortgage at an interest rate of 6.5%

2. Their Insurance Coverage

The couple has registered for life insurance coverage. Frank has got a life insurance cover valued at $450,000 and contributes $300 per month, while Lisa's life insurance is valued at $30,000 and contribute $200 per month.

3. Their Retirement Expenses

If Frank retires at the age of 45 years, his pension will finance more than 40% of his average salary, which is $120,000. His retirement annuity is currently valued at $370,000 on $250,000 basis. Lisa has no pension because she is self-employed.

4. Their Joint Expenses

Bith Lisa and Frank spend about $12,000 per month on their basic needs and other vital expenses. Also, Frank's social security funds are estimated to be $9,000 per month by the time he is 60 years. He plans to claim the security benefits when he retires.

Personal Plan Example For Lisa And Frank

Description Total ( $ )
Employer Retirement plans 750,000
Tax-free and taxable accounts 870,000
Individual Retirement Accounts 610,000
Annuities and Tax-deferred products 360,000
Total 2590000

Additional Assets

Description Total ( $ )
Personal Assets 880,000
Cash-value life 35,000
Total 915,000


Description Total ( $ )
Vehicle Loan 50,000
Mortgage 200,000
Total 250,000

Couples Net Worth = 3505000 - 250,000 = 3255000

The Net Worth Calculation for Lisa and Frank

Description Lisa Frank Joint Total ( $ )
Investments Assets
Retirement plans (Employer)
Frank (401)k 800,000 800,000
Lisa SEP IRA 650,000 650,000
Individual Retirement Account
Joyce Roth IRA 0 0
Tax-deferred products and Annuities
Frank Non-qualified annuity 350,000 350,000
Taxable or Tax-free accounts
Bank Accounts balance 250,000 250,000
Bonds and Stocks 620,000 620,000
Total Amount of Investment Assets
Additional Assets
Personal Assets
House 650,000 650,000
Car 160,000 160,000
Cash-Value life
Lisa's whole life 100,000 100,000
Total Additional Assets
Car Loan 50,000 50,000
Mortgage 160,000 160,000
Total Amount of Liabilities 50,000 160,000 210,000
Net Worth 4,000,000

The Course of Action for Lisa and Frank

The Course of Action for Lisa and Frank
The Course of Action for Lisa and Frank

Lisa and Frank have a brilliant financial plan that can help them secure their financial future. Because they are double income earners with no kids (DINK), they are well-positioned to living a perfect life after retirement and at an old age. Frank has got a job with encouraging security while his wife, Lisa, is an entrepreneur with no job and income security. They can focus on increasing their net worth by increasing their assets. They can also cut their car budget and consider buying a small house because DINKS does not need a bigger home to live in. Lisa and Frank can reduce their car budget from $160,000 to $60,000. When they cut their car and home budget, they will be able to save more money.

The Investment Analysis and Strategy of Lisa and Frank

For Lisa and Frank to have a better financial future, they can invest in 75% using various investment plans. By doing this, they will achieve the dreams of retiring early. Also, they can cut their monthly expenses from $12,000 to $6,000. Furthermore, they can allocate up to 75% of their taxable income in their tax-deferred accounts and also invest the remaining 25% in qualified dividends.

Insurance Strategy

To shield his wife, Frank can take long-term insurance. He can take life policy insurance of $600,000. This amount of money can take care of Lisa in case her husband passes on before 60.

Estate Planning

For Lisa and Frank to strengthen their future financial plans, they can get an estate planning document. They can engage the services of an attorney that will assist them in coming up with a will. In the will, information about the third party that can take care of their properties will be included.

Retirement Planning

Peradventure the couple desires to retire early, they can consider increasing their retirement investments and portfolio. This will help them earn constantly, and when it is added up to their pension and retirement benefits, they will be able to finance their needs.


Financial planning is essential if you desire to live a prosperous life. Please go through the detailed illustrations and draft a workable financial plan from your family today.

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