The Financial Planning Process – Preparing the Financial Plan

We are going to continue talking about the financial planning 6 Step Process . At this stage we have talked about what is important to you and what you are trying to achieve in the initial meeting. You have also done your homework and told me how much both your current lifestyle and desired future lifestyle costs, as well as providing a list of all the assets you have. Now, it is time for me to start creating your lifestyle financial plan.

Lifelong Cashflow

A financial plan should always contain lifelong cashflow. That is, it should look at all the assets and sources of income you may have in your lifetime and all the expenditure that you may have. The goal of the financial plan is ensuring that you have enough liquid assets available throughout your life to do the things that you want to do.


As we are projecting income and expenditure for the rest of your life, we have to use some assumptions on future costs. Some of them may not turn out to be accurate, as the further you project, the more things can change. For instance, inflation may run higher or lower than assumed or even you may retire earlier than you had originally planned. That is why it is important to understand that financial planning is a journey, not the destination. It needs to be kept up to date and adjusted as your goals, taxation, fund growth etc change.

The main projections I use are:

  • You will live to age 100
  • Inflation – 2%
  • Deposit Interest – 2%
  • Investment Growth – 5%
  • Property Growth – 4%

We also use different time periods to reflect different stages in life. This can obviously change based on health and your own personal goals.  As you enter different stages of life, your plan will reflect different changes in your expenditure patterns:

  • Retirement – 60 to 65 – you have stopped working and have all this extra time. You will be spending more on travel and going out. Household expenditure should have reduced as the kids move out of home.
  • Passive retirement – 75 to 80 – Home comforts and routines are more desirable as travelling around the place. Costs will reduce as you are not spending as much money on travel. Medical costs will increase though.
  • Care home – age 95 – you may need to go into a home or get some home care.

Current Situation

When I start working on your financial plan, I start with looking at your financial situation if you do nothing. That is, you continue spending and saving (or not saving!) the way you are at the moment. What will your future financial situation look like? Will you have enough cash to do what you have told me you would like to do?

What If Scenarios

I take a copy of your Current Situation and add in all the things that you want to do. These may be goals like moving house, buying a campervan or even going ranching in the Wild West (an ambition I helped my first financial planning client achieve!).

It is important to pick the top 2 or 3 goals that you want to achieve. Giving a list of 7 or 8 different scenarios only leads to confusion, so it is something that I avoid doing. Remember, we are on a journey, so pick the most important goals now and make them part of your financial plan. You can always add in other goals at a later date.


There are always demands on money so most people do not have the finances to do everything immediately, so I work on solutions so they can achieve what is important to them. Not everything will be achieved in one go, so don’t worry if you might run out of money towards the end of your lifetime, we can work on that. The important thing is to put the structures in place that you will have the cash you need to achieve the top 2 or 3 goals that you said you want to achieve.

Catastrophe Planning

We always assume that we will go through life in good health. But anyone can be in an accident at any time. It might not even be your fault, a car may break a red light and crash into you. Your life may be changed in an instant.

In the catastrophe planning part of your financial plan, I look at:

  1. What if you/ spouse died yesterday
  2. What if you/ spouse became disabled yesterday

In these scenarios, we have adjusted your expenditure to reflect the situation ie your personal expenses will cease, mortgage will be paid off etc. We see if your family will be financial secure to continue their life if one of you died or became disabled and unable to work and come up with solutions to that risk.

I hope this gives you a good understanding of what goes into the preparation of your financial plan. If you have any questions, send me an email at