What is a financial plan?

  • 30 May 2021
  • 10 minutes

Whether you decide to go it alone, or you choose to seek advice from an expert, we believe a financial plan is one of the most valuable investments you can make.

What is a financial plan?

Financial planning is the management of your finances with the aim of supporting your lifestyle and achieving your long-term goals.

Based on the information you share with your financial adviser, if you decide to use one, a plan is developed that aims to improve your financial wellbeing, both now and in the future. By taking the time to fully understand where you are now as well as where you want to be, your adviser will prepare a personalised financial plan which aims to help you get there.

You can also easily create your own financial plan without using a professional. Download our guide to creating your own financial plan to help give you confidence about your financial future.

What is included in a personal financial plan?

Financial planning isn't just for the wealthy. Creating a roadmap to help you make the most of your money which aims to ensure that you meet your future goals can be for everyone. Depending on your personal circumstances your plan could contain different products or service recommendations to reflect your financial needs. These include:

  • Protecting you and your family through insurance products such as life insurance and assurance, critical illness cover and income protection.

  • Building an investment portfolio that suits your short-term and long-term goals, timelines and your willingness to take risk.

  • Investing for your children's future.

  • Pension planning and managing your retirement income.

  • Passing on your wealth to loved ones in the most tax-efficient way.

A good financial plan should be amended alongside changes that happen in your life. It's a tool to track your progress, and one you should keep updated with the aim of making sure you're still on track to achieve your goals. You should review your financial plan regularly, including after important milestones, like getting married, buying a house, having a child or losing a loved one.

Use our free online tool to see if you could benefit from a financial plan.

Why do I need a financial plan?

Financial planning can have many benefits. It helps you to consider your life goals alongside your financial situation so that you can manage your money effectively.

Understanding your financial position now could also help you plan for the unexpected in the future. Being prepared for unforeseen circumstances such as losing a job, becoming ill, or even a loved one passing away, could help to provide financial security when you need it the most.

A financial forecast could help to put you in control of your spending, cash-flow, savings, and investments with the aim to reduce stress and provide valuable peace of mind.

Steps to creating and implementing your financial plan

You could invest in your financial future today by following this four step planning process:

Step 1: Plot your life plan

A financial plan can be a great way of creating a timeline which ultimately aims to lead you in achieving your long-term dreams and aspirations. You probably plan so many other areas of your life, such as holidays and your career, but have you taken the time to think about your longer-term goals?

What will your retirement look like, and how you might fund it?

Or how you might pay for school or university fees?

Do you think about what would happen to those you care about if something happened to you tomorrow?

And how you might be able to manage your inheritance in the most tax-efficient way?

Step 2: Understand where you are today

Now that you have set your goals, it's time to evaluate your current financial situation.

Evaluating your income and expenditure is an effective way of understanding how you could make the most of your money.

When reviewing your income remember any bonus or overtime payments you may receive, as well as your standard salary. Any pensions and other sources of revenue should also be taken into account.

For expenditure, don't just consider your day to day outgoings such as your mortgage and bills, but also include your longer term commitments, like car lease repayments or loan repayments, and money you spend on holidays, hobbies and entertainment.

Being completely honest about your finances will allow you to understand if you should save and invest or improve your budgeting and spending habits.

Step 3: Planning how to get to where you want to be

Understanding your goals and financial situation will enable you to confidently complete a financial action plan. This is where you could start to turn your dreams into reality by creating an actionable plan.

For example, you may want to review your insurance policies to make sure that you have the right protection in place should the unexpected happen.

It can sometimes be uncomfortable to talk about money and investments with your loved ones, but having a plan in place could make things much easier for you and your family during unexpected or tough times.

Step 4: Reviewing your progress You’ve now got a basic financial plan which should give you more confidence to know where you’re heading and if you’re on track.

Reviewing this plan each year will help to make sure the plan is aligned with your goals and objectives throughout your life.

If you’d like an expert to review your plan, or if you’re struggling to take action and identify solutions, then we’re here to help.

Download our guide to creating your own financial plan.

Is financial advice right for me?

The internet gives you immediate power at your fingertips. We can buy almost anything online without having to involve a middle man. However, when it comes to something as important as our finances, it could pay to go to an expert.

Our advisers will work with you to develop a comprehensive financial plan that identifies and prioritises your goals and ambitions, then outlines the steps you need to take to potentially achieve them. Through regular check-ins we could also make sure that you’re on track to meet your financial goals whilst making the most of your money.

We’ll recommend products and services that are right for you and discuss any costs involved along the way. Our advisers get to know you, your job, your family, and your lifestyle to get a full understanding of where you are and how we could help you get to where you want to be.

Because your dream is only a plan away.

It all starts with a free initial consultation to understand if our service could help you. There are no hidden fees or charges, and you’ll only pay for our service if you decide to take forward the recommendations we present to you in your personalised financial plan.

Call 0808 109 2071 to book a free initial consultation today.

Why choose Schroders Personal Wealth?

We benefit from 400 years of combined experience in investment management and banking offered by our two shareholders, Lloyds Banking Group and Schroders.

It’s our mission to help more people across the UK realise their dreams by unlocking the power of a personalised financial plan. To achieve this, our advisers are employed by us and share our values and commitment to clients. They don’t earn any commission on sales – they’re incentivised only for giving clear, objective advice, that aims to help clients reach their goals.

After all, money is simply fuel for the rocket, and what people really want is to use it to go somewhere. They have hopes, fears and dreams. Great financial planning helps them work out where they want to be and how to potentially get there.

Our heritage may be 400 years old, but our approach is built for the future.

Important information

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.

Fees and charges apply at Schroders Personal Wealth.

In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

Let's start with a free initial consultation

We'll begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.

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