What is in your Financial Plan?

Following on from my previous blog post which you can read here, where I discussed why a Financial Plan might be of benefit, I am going to take some time to look at what could be in your Financial Plan.

My starting point is to state that your plan is your plan, meaning that it will be individual to you and may include or exclude some of the things I discuss below.


This is the beginning of any planning, as objectives are considered and documented towards which any planning is directed. As I mentioned previously, the objectives set out here may be diverse based on short, medium and long-term timescales.

The most important aspect of this is to ensure that what you are planning towards are your objectives. If you have never considered setting financial objectives before it may take some time until you decide what you want to plan for. Take the time to consider how you want your finances to work for you and what you want to achieve.

Some examples could be:

Early Mortgage Repayment

School or University Fees for Children or Grandchildren

Career Break

Business Sale

Early Retirement

Retirement Lifestyle

Establish your Current Position

Before any planning is undertaken you should establish the current value of all your assets, alongside any ongoing debts or future liabilities that need to be considered. You could also sub-divide into liquid and illiquid assets, showing the value of monies you can draw on if needed. This will give a clear picture of how well positioned you are to meet your objectives from your existing wealth

Included in this section will be details of your income and expenditure, which will also confirm your tax status, each important for making planning decisions later.

At this stage we aren’t considering any planning options, but merely making a factual statement. Some examples of what could be included here are:

Salary, including details of anticipated bonuses or guaranteed wage increases

Outstanding Mortgages, Credit Cards or Loans

Main Residence, and any second homes

Savings including cash deposit emergency funds

Investments, including any buy-to-let properties or business interests

Retirement Savings, including any workplace pension schemes you are a member of.

Inheritances you may be due from deceased relatives

This statement could also include any shared wealth if the Financial Plan is going to include family members as well.

Attitude to Risk

A clear statement expressing the risk you are willing to take with either lump-sum or regular savings is vital in your Financial Plan. The level of risk you are willing to take will guide the types of investment you make, but can also increase or decrease the amount needed to meet objectives over the longer-term.

Alongside your attitude to risk should be your Capacity for Loss. How well can you absorb losses in the short-term? If the markets were to fall dramatically, what impact would that have on you? The answers to these questions are all important to determining how and where you should invest.

The “Fear of Missing Out” can play havoc with your investment plans and meeting your objectives; Sometimes it is just too hard to resist investing into the latest trend. The surety of knowing you are investing appropriately according to your risk profile will help you avoid making speculative investments, especially if the losses from these investments may be unaffordable and unnecessary.


The part that is truly bespoke to you – what are you going to do to meet your objectives; All the exciting investment opportunities that could open for you, mystical tax planning strategies that Her Majesty’s Government will never spot, opening secret accounts in far flung island destinations?

Not quite.

A comprehensive Financial Plan will have solid foundations on which to build, including some of the following;

Appropriate insurance cover to repay mortgages and support dependants, or meet income needs in the event of being unable to work for long periods.

Directing additional spare monies into cash deposits to ensure there is a sufficient emergency fund in place.

Making use of tax-efficient accounts where possible.

Ensuring pension contributions are being maximised by joining any workplace schemes where appropriate.

Using available tax allowances for spouse, children and grandchildren.

It may be that you must make short-term spending sacrifices to meet longer-term objectives. If this is the case, you will be making these sacrifices from an educated position understanding the context in which they are made.

Once these foundations are in place, if appropriate for your objectives you can begin to invest with confidence. This does not mean making rash decisions, but instead having the confidence to know that your investments are appropriate for you, appropriate for your level of wealth and appropriate for what you are trying to achieve.

A surprising outcome of Financial Planning is that you may have more disposable income and wealth than you need to meet your objectives. This could allow you make additional spending decisions or decide to make gifts to relatives, with, that word again, confidence that this is affordable and appropriate for your circumstances.

As I have mentioned in my previous blog which you can read here, you should meet often with your Financial Planner, and other professionals such as Accountant or Solicitor, to ensure your plan is relevant for your circumstances and to bring it up to date if needed.

If it is time for you to write, or re-write, your Financial Plan, please e-mail Ian Aldred, or call 01772 821021.