When you hear the term “financial plan” what comes to mind?

Most people think immediately about investments. But did you know that’s only one part of a financial plan?

A comprehensive financial plan focuses beyond investments. It calculates your net worth, after-tax income, spending, retirement shortfall, and saving goals for other things/experiences you want from life.

Other things could be a home renovation, luxury vehicle, or vacation home. Experiences could include travel, continuing education, or self-improvement.

A comprehensive plan also identifies ways to protect your assets. Additionally, it assesses if you have the necessary documents to meet your estate planning wishes.

Analyzing your investments is only one part of a financial plan.

Why do I need a financial plan?

If you still question whether you need one, think of a financial plan as a working document to help you make wise financial decisions.

Back in college, you were given a catalog that identified which courses you needed to pass in order to attain your degree. It was your road map towards achieving your goal – to graduate.

Unfortunately, life does not come with a catalog to guide you towards achieving your goals. You create it on your own.

That’s where a financial plan comes in handy. It allows you to see if you can afford the lifestyle you envision. It’s your financial feasibility analysis.

What if I have no money in investments?

Some people think they don’t have enough money to warrant a financial plan. For example, a recent graduate with a large education loan. Another example is someone who generates good income but never saves.

If you’re in this segment, a financial plan will help you balance debt reduction and saving for your future lifestyle. It will also help you understand your spending habits and learn financial management.

What if I have good income and living the lifestyle I want?

On the other spectrum, some people don’t think they need a financial plan because they have sufficient income. They have the luxury of a steady income to afford whatever they want.

If you’re in this segment, you’ve never needed to follow a budget or calculate how much money you spend. But what if there’s a health concern or unexpected situation that changes your income potential?

And for those near retirement, it’s even more important to have a financial plan. Shifting from “saving for retirement” to “living in retirement” requires understanding how much money you truly spend. It’s information needed to figure out if you will run out of money once you stop working. You may need to adjust your lifestyle or work longer.

A financial plan is more than an analysis of your investments. It’s a tool to help you make better financial decisions regarding your lifestyle. Since you’ve gathered your financial documents to file your taxes, go ahead and take that next step … update your financial plan. If you don’t have a financial plan, then isn’t it time you have one developed?


Niv Persaud, CFP®, CDFA™, RICP®, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing spending plans, comprehensive financial plans, divorce financial reviews, retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”