Financial planning is a popular topic these days.  It’s hard to turn on the TV or get online without seeing an advertisement for some type of financial planning service.  People have different perceptions of what a financial plan is and whether they need to hire an expert to assist them with a plan.  The truth is everyone currently uses some type of financial planning.  Some people simply monitor their savings, others use budgets to plan, some people use mental math and think in round figures and still others use software or a service to assist them.  The variations used by people to monitor and approach their financial situation is about as diverse as everyone’s individual financial situation.  To that point, because individuals have such unique financial situations, no two financial plans will be alike.  Below are some items that should be a part of every financial plan:

1. Data is comprehensive and accurate: In order to forecast into the future and generate realistic projections, it is important to have accurate data and comprehensive software that can incorporate the various nuances and components of one’s financial life.
2. Putting the plan into action: Its one thing to be able to forecast and say with certain assumptions you will be able to retire at 62 and pursue all your goals.  It is quite another for these assumptions to play out in real life.  That is why it is important to understand your plan and take steps to implement it.  A financial plan is not static.  Situations change throughout one’s life and one’s financial plan needs to be dynamic and adapt to these changes.
3. Making sound decisions within each component of the plan: Inherent in everyone’s financial lives are decisions regarding investing, insurance, taxes and estate planning, to name a few – all of which will weigh heavily on a financial plan.  Many of these issues are complex and ever-changing.  Expertise in these areas and making informed decisions is paramount in the financial planning process.

When deciding to use a financial planning professional, the cost is an important component to consider.  There are different types of cost structures within the industry including hourly/time based, fee-only, project-based and subscription-based.  No one fee structure is perfect for everyone.  For example, a private business owner who is in the process of selling his business and has complicated estate planning issues might need more expertise and would be better off working with a fee-based professional.  On the other hand, a young couple that has just started saving for retirement might favor a less extensive solution with an hourly-based or project-based professional.  It is important to weigh the cost and level of service one needs when deciding to use a professional.