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  • Writer's pictureHarry N. Stout

250- October is Financial Planning Month – Do You Have a Plan in Place?

October is National Financial Planning Month. In America today, approximately 30% of households have a written plan in place. In my view, that is an alarming statistic. I wanted to remind our subscribers that they should have a written financial plan. In this post, I will discuss why having a plan is needed, outline the basic components that are normally included as part of a comprehensive plan and touch on the costs of putting a plan in place.

To start, a financial plan is different from having a cash plan or budget. A cash plan normally covers your projected cash inflows and outflows for a short time period (i.e., a rolling twelve-month period) while a financial plan addresses several elements of your long-term (i.e., at least 10 years) financial health (including cash flows) along with other key aspects of your financial life.

Here are the key elements of a comprehensive financial plan. They include:

1. Financial Values and Goals

As we have discussed in prior posts, you can’t manage your money and create a plan until you have established your financial values, including the role you want money to play in your life, spent some time improving your basic knowledge of personal finance and clearly understand your life goals (e.g., when you want to buy a home or how much college education support you want to provide your children). Please see Post 140 – Is it Time to Rethink Your Financial Values?

2. Personal Financial Inventory

Every plan needs a starting point, so your next action is to determine what financial assets and obligations you have to begin with. Make a list of all your assets (bank and investment accounts, real estate, valuable personal property) and another list of all your debts (credit cards, mortgages, student loans). Please see Post 186 – Taking A Financial Inventory.

3. Cash Plan or Budget

You need to have a cash budget or plan in place that clearly shows your inflows and outflows. This forms the foundation for saving and investing actions you will plan for your future. See Post 28 – How a Cash Budget Changed My Money Mindset for a full explanation of how to create a cash plan for your household.

4. Debt Plan

Once you have a complete inventory of all your debts and obligations. The next step is to develop the actions to reduce the cost of that debt through possible refinancing, restructuring or aggressive repayment.

5. Retirement Plan

You need to develop your retirement savings and, once you are ready to retire, your retirement income plan. There are numerous decisions you need to take to develop these plans including asset management, benefit elections and properly covering expected healthcare needs.

6. Your Personal Financial Safety Net, including Your Emergency Fund

The pandemic has taught us that the unexpected can and does happen. Your cash emergency fund (ideally six months — worth of essential living expenses (e.g., groceries, housing, transportation, debt service and utilities) fund should be established to help offset the unexpected costs of life, including medical bills, house repairs, accidents or a period of unemployment. I think this fund, along with other considerations should be part of your personal financial safety net. See Post 107 – Why You Need a Personal Financial Safety Net.

7. Proper Insurance Coverages

You buy insurance coverage to provide cash for future delivery to help minimize the financial risks you face. It provides protections for your household. You should have a comprehensive set of coverages in place that should include:

  • Health insurance

  • Long-term care insurance (for over age 50 individuals)

  • Disability insurance or income protection insurance

  • Auto and homeowners’/renters’ insurance

  • Liability insurance

  • Life insurance

  • Longevity insurance

8. Your Legacy or Estate Plan

At a minimum, you should have a will, which states your final wishes with regards to your assets, dependents and who you want to administer your estate. You should also keep the beneficiaries of your insurance policies and retirement accounts up to date as events change but at least annually. We will have a post later this month on how to put a legacy plan in place.

Putting Your Own Plan in Place

There are three usual ways to develop a plan:

  1. Do it yourself

  2. Use a robo-advisor or related financial planning application

  3. Work with a professional financial planner.

Based on your personal financial knowledge, available time or budget you should be able to find the assistance you need.

Cost of a Plan

The cost of having a standalone financial plan, without investment management or continued services, is usually in the range of $1,000 to $3,000. The financial professional will discuss their rates and charges as you discuss having the service completed.


Having a financial plan in place focuses your long-term thinking and money awareness. The money decisions you make today can have significant impacts on the quality of your financial life later. It is fundamental recommendation of personal financial advice professionals to get a plan in place. I agree and I hope you will take the time to put a plan in place for your household.


If you like our posts, you’ll love our books! The FinancialVerse works to help you identify life’s financial challenges and provide helpful resources and tips to overcome these hurdles and improve your personal money matters.

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