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Guidance For Creating Your Own Personal Financial Plan


Personal Financial Plan Step One - Assess Where You Are Now Financially

  • Prepare a Net Worth Statement. See Net Worth Statement.

  • Calculate Your Debt-to-Income Ratio See Debt-to-Income Ratio

  • Prepare a Cash Flow Analysis

    A Cash Flow Analysis, aka "budget" or "spending plan", lists your income and expenses by month. Subtract your expenses from your income to obtain your net cash flow. If it's positive, plan what to do with the excess. If it's negative or you break even, either find ways to increase your income or cut your expenses (or both, for even better results). See Budgeting Guidelines and Motivation.

  • Manage Your Risk. Are you, and your business if you have one, adequately protected in the following ways?

    • Business insurance
    • Homeowners insurance
    • Health insurance
    • Long-term disability insurance

  • Do you have the lowest possible interest rates on your debts?

    • Mortgage
    • Credit cards
    • Car loans

  • Assess Your Risk Tolerance

    How much risk are you comfortable with? There are lots of online tools that will help you determine your risk tolerance.

  • If you have investments, prepare an asset allocation analysis (how much in stocks, how much in bonds, etc.) Are you comfortable with having these amounts invested in these types of investments? Do you have all (or too many) of your eggs in one basket?

  1. Personal Financial Plan Step One - Assess Where You Are Now Financially
  2. Personal Financial Plan Step Two - Determine Where You Want To Be Financially
  3. Personal Financial Plan Step 3 - Design a Plan To Reach Your Goals
  4. Personal Financial Plan Step Four - Implement the Plan
  5. Personal Financial Plan Step Five - Monitor the Plan

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