How to create a financial plan

If you want to create a financial plan then there are some fairly simple and logical steps you need to take to get a reasonably accurate picture of how much money you need now or in future;

1. Write down all your goals and how much each will cost
2. List all your outgoings now and in future
3. List all your expected income now and in future
4. List all your current savings and investments

This is all easy stuff. Where it gets tricky is that you now need to factor in the impact of inflation on the cost of your goals, outgoings and income. You also need a method for calculating how extra money you will be able to accumulate together with some growth assumptions about the money you already have saved.

If you are a bit of a techie and have some time to spare, I'm sure that some of you can create working formulas in an excel spreadsheet which will then calculate whether you will have enough money in future. Altering the assumptions about growth (taking more or less risk), altering your future spending plans or altering the amount you save will all have an impact on this plan.

Alternatively of course you can save yourself some time (and worry) by consulting a good financial adviser or planner. He or she will also be able to show you the impact of market crashes on your life plan to help you decide how best to invest your money.

If you would like to find out more then you can contact me on Twitter @ReadingIFA or my website http://www.timeindependent.co.uk/ will be available next week. You could also ask a question here if you like.

Happy Planning!!

Tim.