Introduction to Financial Planning Part 1:

What Personal Financial Planning is and is Not

by Kent E. Irwin

Personal Comprehensive Financial Planning: Defined

A financial plan serves as an ongoing master plan for your money.  It also serves as a cornerstone for decision making throughout your life.  All of life’s decisions affect our finances; education, home purchases, vacations, children and a multitude of other choices have an affect on college planning, retirement, etc.  A financial plan should be changeable so that you can track progress on your goals and account for the unexpected.

The Need for Financial Planning

Most people need written and computerized financial plans to increase the likelihood of achieving their goals.

There are two reasons for this:

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Written goals (along with a tracking system) are much more likely to be obtained

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The myriad of complex moving parts of the financial world and endless options demand a program to help people navigate.

These are the reasons we have created eFinPLAN financial planning software for consumers.

Basic Components of Financial Planning

1: Written Goals

“A goal without a plan is just a wish”ⁱ.  A plan should contain a set of written goals and the steps to achieve them.  These goals should define your current lifestyle and the one you want to create for the future.

2: Changeable

A financial plan should provide for planned and unplanned contingencies.  It should give you the ability to make changes as your life changes.  Events, such as the birth of a child, purchasing a home or car, or an unexpected bonus or expense can significantly change your entire plan. 

3: A process

Financial planning is a process.  It requires a small initial investment in time to create a plan, but a lifetime of monitoring progress to achieve goals. It also requires self-education in financial matters to stay current.

4: Fitting the pieces together

Finances are complex.  Consider the moving parts of your finances:  net worth, future goals, investment planning, risk management, insurance, cash flow, wills, retirement, and college—to name just a few.  A financial plan helps you to become more knowledgeable and to understand the complexities of planning.

5: Personalized

A financial plan should be modified and adapted to your unique needs.  It should not be created with a cookie cutter approach because everyone’s situation is different.

6: Comprehensive

A financial plan should be comprehensive: it should cover most areas of your financial life.

Financial Plans Should Not Be:

1: The ‘End All’

No single financial plan, company or person has all the financial answers and knowledge you need, and no financial plan can address everyone’s individual situation and show all possible solutions.  Having a financial plan like an eFinPLAN financial plan will significantly help you plan and organize your affairs and goals and give you a track to run on.  When your plan is coupled with the trusted advisors on your team and your increased knowledge and perseverance, your goals will become within reach. 

2: Product Purchase Centered

Financial planning should never be based on the sale of a particular insurance or investment product. Financial planning should be unbiased and concerned only with the needs of the individual. 

3: Unbalanced

Financial plans should be balanced.  They should not over-emphasize one area such as investments, retirement, insurance, taxes or death planning.  Financial Planning should be holistic, addressing all the areas of planning and how they relate to and affect each other.

4: ‘Handled’ for the client

Clients should not turn over finances to a planner to abdicate decision making.  Financial planning should involve and engage the client.  Clients should not stand on the sideline, but should participate actively in the process.  Ultimately individuals are responsible for their decisions.  eFinPLAN emphasizes this by putting you in control.

5: A Replacement for Trusted Professional Advisors

Financial plans or planners are not a replacement for the team of financial, tax and legal advisors that you assemble.  No one person or company has all the knowledge and experience that you need; therefore you will need their help to implement your plan. 

Summary

eFinPLAN represents the latest evolution in financial planning. It is the first and only affordable web-based resource that allows you access to innovative and educational software to help you meet your planning needs. eFinPLAN will help you increase the chances of reaching your financial goals because you will:

1.       Have a plan.

2.       Increase your knowledge and understanding of financial matters.

3.       Utilize trusted professional advisors to implement your plans.

4.       Regularly monitor your progress.

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Your individualized eFinPLAN financial plan report and all of the articles on the eFinPLAN website are designed to Take the Mystery out of Financial Planning ^SM by presenting information in an educational and simplified format. 

Kent E. Irwin is CEO and founder of eFinPLAN, LLC. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU). He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . For more information about eFinPLAN, visit eFinPLAN.com.

Revised 1/08

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