ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Personal Financial Planning in a Nutshell

Updated on June 25, 2011

You may already have a personal financial plan or you may be thinking it's time to look at personal financial planning, but you may also be wondering what to include and why you should have one?

Here are the answers to those questions - Personal Financial Planning in a Nutshell.

A financial plan is a combination of a stock-take of your personal finance and money situation, a set of goals along with investment recommendations. Like Dorothy in The Wizard of Oz, it's a path for you to follow - there are often alternative routes and which route you take will determine your destiny.

If you want to retire from work one day and have sufficient financial resources to enjoy it, then making a personal financial plan is a great step to take.

Here, are some reasons for doing it and a guide to what's included in a good financial plan.

What's Included in a Personal Financial Plan?

A good personal financial plan has a number of sections and depending upon the complexity (or not) of your financial position and your stage of life will determine how much detail is included in each section.

Your financial plan should cover the following;

  1. Your current situation - a list all of your assets and liabilities
  2. Your budget -
  • Your income - personal income and investment income in different sections
  • Your taxation
  • Your expenses - in sections such as - essential fixed expenses ( like your rent or mortgage payments, variable expenses (required expenditure such as rates, medical insurance etc) and discretionary expenses (the fun part of spending)

The surplus (or shortfall) is then calculated as funds available for saving and for meeting those all important personal goals.

3. Your goals along with a time frame. Its easier if you chunk your goals into those which are short-term, medium term and long term.

Examples of short term goals are going on holiday to Hawaii next March and it will cost $3,000. Notice how specific that goal is?

Medium term goals might be replacing the car in two years time at a cost of $10,000.

The classic long term goal is to retire on my 63rd birthday and have an after tax income of $X per annum.

Why should you chunk your goals? It's easier to see them and easier to achieve them. Short-term goals are usually reasonably easy to achieve but long term goals much more difficult. By chunking them, you can more easily check them off as you reach them.

4. Your risk profile - an assessment of your attitude to risk via a risk assessment is vital to understanding how you tolerate risk - or the ups and downs of the market.

The information from your risk profile will be used later when your financial planner recommends the percentage of investments to be made into the various asset classes of cash, fixed interest, property and equities (shares).

How Are You Going to Achieve Your Personal Financial Goals?

This is the exciting part of the plan.

In this section your financial planner (or you if you are doing a DIY financial plan) wraps numbers around your goals.

It's the details of how you can (or sometimes cannot) achieve them.

Part of this section will include a savings program for short and medium term goals which will usually be held in cash or fixed interest as these are liquid assets.

Also included will be a recommendation for long term savings for retirement. The plan will differ on whether the details of those investments are included here or in the investment section of your financial plan.

Estate Planning Basics

Are your wills up to date?

Do you have a trust and is one recommended?  If so why might it be useful for your personal circumstances? A trust adds a level of complexity to your financial situation so you must be sure its going to help rather than hinder!

Are powers of attorney and enduring powers of attorney in place? You need these so that others can act if you are alive and unable to act (say in a coma), and for when you die.


The insurance section of the plan takes a look at your current insurance and also insurance which is recommended to protect you and your family.

Are you covered for income protection so that if you are seriously ill or disabled, your income will continue (at some level) while you are unable to work?

What level is your medical insurance, life insurance, insurance to cover the debt etc?


You could be forgiven for thinking that this should be the real focus of a good personal financial plan. In a way it is, but its really just a tool.

What's critical are your goals and the investment side of it is just the way you can achieve those goals.

The investments which are recommended will be shown by asset class - cash, fixed interest, property (not your personal home but investment property) and equities or shares.

Mutuals and managed funds are often a combination of the above asset classes and so they might be lumped together.

Cash and fixed interest are liquid assets because if you need to you can easily turn them into cash. Property and equities are illiquid assets because its more difficult and often takes time to realise cash from these investments.


Regular monitoring of your plan is essential to see if you are on track, if the investments are still considered appropriate, your insurance coverage is adequate.

Generally, but this is age dependent, your plan should be reviewed at least annually and adjustments made.  However, if there are major life changes - a marriage, divorce, children arrive, inheritance is received, significant job changes which affect income to name a few, then your plan should be reviewed with haste.

Personal Financial Planning in a Nutshell

So that's it!  Personal financial planning in a nutshell.

And finally......

This hub is copyright Travelespresso.  Do not copy.

Writers love feedback so please leave a comment, rate my article and/or pass it on.  Thank you!


    0 of 8192 characters used
    Post Comment
    • Wesley Meacham profile image

      Wesley Meacham 

      6 years ago from Wuhan, China

      Reasonable discription of financial planning. You provide a lot of good information a well organized way. Voted up and sharing.

    • profile image

      Floyd Day 

      8 years ago

      Hey There. I found your blog using msn. This is a really well written article. I will make sure to bookmark it and return to read more of your useful information. Thanks for the post. I will definitely return.

    • travelespresso profile imageAUTHOR


      8 years ago from Somewhere in this exciting world.

      Thanks for your lovely compliment and for rating it up!

    • anujagarwal profile image

      Anuj Agarwal 

      8 years ago from Noida

      You have provided this extremely useful information in a very easy to understand manner. Rated UP!

    • travelespresso profile imageAUTHOR


      8 years ago from Somewhere in this exciting world.

      Once again, thanks so much for stopping by and leaving a comment Simone.

    • travelespresso profile imageAUTHOR


      8 years ago from Somewhere in this exciting world.

      Goals and all of the information should definitely be written down jcales. The entire plan is large and detailed so its important to have it in writing. Sorry I didn't make that clear, I'll revisit my hub.

      Thanks for much for stopping by and leaving a comment.

    • Simone Smith profile image

      Simone Haruko Smith 

      8 years ago from San Francisco

      You've laid everything out so nicely! I was really able to think about and organize my financial goals as I read along. Great Hub!

    • jcales profile image


      8 years ago

      Good info. I guess the simple goals should be written down in order to achieve them. I've been wanting another car for 2 years but didn't set a date due to other circumstances.

    • travelespresso profile imageAUTHOR


      8 years ago from Somewhere in this exciting world.

      A good risk profile via risk profiling tools are very valuable. Your comment is well made Daddy Paul. It sounds like you have some experience in this field.

      Thank you for your comment and for stopping by.

    • Daddy Paul profile image

      Daddy Paul 

      8 years ago from Michigan

      "Your risk profile - an assessment of your attitude to risk via a risk assessment is vital to understanding how you tolerate risk - or the ups and downs of the market. "

      Exactly too many people put no effort here!


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)