Sample Personal Financial Plan: What a Financial Plan Can Include
A personal financial plan should reflect the person or family it is designed for.
There is no universal template that determines how much someone should save, invest, spend, or give. The appropriate structure depends on income, assets, liabilities, business interests, family circumstances, tax considerations, and long-term priorities.
Still, a personal financial plan sample can be useful because it shows how the major pieces of financial planning may fit together.
For someone with a straightforward financial situation, a plan may be relatively simple. For a business owner or high-net-worth family, the planning process may need to connect personal cash flow with business income, investments, taxes, estate planning, and potential liquidity events.
Compound Wealth's financial planning model brings together investments, business income, tax planning, and real estate holdings as part of its planning process.
The following example is hypothetical and intended for educational purposes.
Sample Personal Financial Plan at a Glance
Consider a hypothetical business owner named Alex.
Alex:
Owns a private company
Receives salary and business distributions
Has a taxable investment portfolio
Owns a primary residence
Owns an investment property
Is saving for retirement
Has two children
Is considering selling the business within several years
A financial plan for Alex could include the following sections:
Financial goals
Cash flow
Emergency reserves
Investments
Retirement
Tax planning
Business planning
Estate planning
Insurance and risk considerations
Ongoing review
The important point is not the number of categories. It is how the categories relate to one another.
1. Define Financial Goals
A financial plan starts with decisions the person actually cares about.
For Alex, the goals might include:
Maintaining a desired lifestyle
Funding retirement
Supporting children's education
Growing long-term investment assets
Preparing for a potential business sale
Supporting charitable organizations
Transferring assets efficiently to the next generation
Goals can be separated into short-term, medium-term, and long-term priorities.
That distinction can help determine which assets should remain liquid and which may be appropriate for longer time horizons.
2. Review Income and Cash Flow
The next step is understanding where money comes from and where it goes.
For a business owner, income may include:
Salary
Business distributions
Investment income
Rental income
Bonuses
Other sources
Cash flow planning can also account for irregular income.
A business owner may have significant income in one year and substantially different income in another. A personal financial plan can model these differences and consider how they relate to taxes, spending, savings, and investments.
Compound Wealth's tax planning services emphasize multi-year planning around income, deductions, cash flow, bonuses, distributions, and other irregular income.
3. Establish an Appropriate Cash Reserve
A personal financial plan should consider liquidity.
An emergency reserve can provide access to cash for unexpected expenses without requiring an individual to immediately sell investments.
The appropriate reserve depends on circumstances such as:
Household expenses
Income stability
Business ownership
Debt obligations
Insurance coverage
Planned purchases
Other available liquidity
A business owner may also need to distinguish between personal emergency reserves and business working capital.
4. Organize Investments
An investment section can summarize:
Retirement accounts
Taxable investment accounts
Cash
Real estate
Business equity
Other investments
The purpose is not simply to list account balances.
A useful plan can examine how the assets work together.
For example, a business owner may already have substantial exposure to one company through ownership. That concentration can become relevant when considering the risk profile of the rest of the household's portfolio.
The plan may also consider how different accounts are taxed, when funds may be needed, and how investments relate to the person's broader financial objectives.
5. Incorporate Retirement Planning
Retirement planning can involve more than estimating a future account balance.
Questions may include:
When might retirement begin?
What annual spending level may be appropriate?
Which accounts may provide retirement income?
How might taxes affect withdrawals?
What happens if retirement occurs earlier or later?
How does a business sale change retirement resources?
The answers can change over time.
For someone planning to sell a business, retirement planning may also need to consider the timing and structure of a potential transaction.
A business owner's retirement resources may include investment accounts, real estate, business equity, and other assets. Understanding how those resources may contribute to future cash flow can be an important part of the planning process.
6. Build Tax Planning Into the Plan
Taxes can affect many areas of a personal financial plan.
Potential planning topics may include:
Income timing
Business distributions
Retirement contributions
Capital gains
Charitable giving
Real estate transactions
Business sale considerations
Estate planning
This is where a personal financial plan becomes more useful than a basic budgeting worksheet.
The tax impact of a decision can affect its overall financial implications.
For example, an investment decision may involve both potential growth and future tax considerations. A business owner may need to consider the tax implications of compensation, distributions, or a future sale.
Compound Wealth describes its tax planning process as a multi-year approach that can consider business decisions, retirement, income timing, real estate, and potential business sales.
7. Connect Personal Planning With Business Planning
For an entrepreneur, the business may represent one of the largest assets in the financial plan.
That creates an important connection between business strategy and personal wealth.
A plan may address:
Business valuation considerations
Ownership concentration
Succession
Potential sale timing
Liquidity needs
Business distributions
Post-sale investment planning
The business cannot always be separated from the owner's financial life.
For example, a decision to retain earnings in a business may affect personal cash flow. A potential business sale may create a significant liquidity event that changes investment, tax, retirement, and estate planning considerations.
This is one reason business owners may benefit from considering personal and business decisions within the same planning framework.
8. Add Estate Planning Considerations
Estate planning addresses what happens to assets if circumstances change or after death.
Depending on the family, considerations may include:
Wills
Trusts
Beneficiary designations
Business succession
Charitable giving
Family governance
Liquidity for estate obligations
Estate planning is generally coordinated with appropriate legal professionals.
The financial plan can help organize the financial information those professionals may need.
For a business owner, estate planning may also involve questions about ownership interests, succession, liquidity, and how assets may be transferred to family members or other beneficiaries.
9. Review Risk and Insurance
Risk management is another part of a personal financial plan.
Potential areas include:
Life insurance
Disability coverage
Property and liability insurance
Business insurance
Umbrella liability coverage
Long-term care considerations
The appropriate coverage depends on the person's circumstances and existing policies.
Insurance decisions can also change as income, assets, family responsibilities, and business ownership change.
For example, a business owner with a growing company and dependents may have different insurance considerations than someone who is retired and no longer has business obligations.
10. Create a Review Process
A financial plan is not necessarily a document created once and filed away.
Income changes. Businesses grow. Tax laws change. Investments fluctuate. Families change.
For that reason, periodic review can be useful.
Compound Wealth describes quarterly strategy checkpoints and scenario planning as components of its planning process.
A review might examine:
Progress toward financial goals
Cash flow
Tax projections
Investment allocation
Retirement assumptions
Business changes
Estate planning updates
Upcoming financial decisions
The frequency of review can depend on the person's circumstances. Someone experiencing a business transition or major liquidity event may have different planning needs than someone with relatively stable income and assets.
What a Simple Financial Plan Might Look Like
For someone without business ownership or significant financial complexity, a plan may contain:
Goals: Retirement, home purchase, education, charitable giving
Cash flow: Income, expenses, savings rate, emergency reserves
Investments: Retirement accounts, taxable accounts, cash
Taxes: Income tax considerations, retirement contributions, capital gains
Risk: Insurance coverage and emergency planning
Estate: Beneficiaries, wills, powers of attorney
Review: Annual or periodic updates
This type of plan can provide a framework for organizing financial decisions without requiring every possible planning area.
What a Business Owner's Plan Might Add
A business owner's plan may require additional considerations:
Business: Ownership, valuation, cash flow, distributions
Tax: Business and personal tax coordination
Liquidity: Potential transaction planning
Wealth: Concentration and diversification considerations
Estate: Succession and family wealth
Accounting: Current business financial information
Business owners may also need to consider how a major company decision could affect their household finances.
For example, a business expansion could affect cash flow and personal liquidity. A new investment property could create tax and financing considerations. A potential business sale could affect retirement resources, investment allocation, taxes, and estate planning.
How a Personal Financial Plan Can Change Over Time
A financial plan should be capable of changing as circumstances change.
Someone may begin with goals centered on building savings and purchasing a home. Later, the focus may shift toward retirement, education funding, investment management, or estate planning.
For a business owner, the planning process may change significantly as the company grows.
Major events that may prompt a review include:
Starting or selling a business
Receiving a significant increase in income
Purchasing investment real estate
Receiving an inheritance
Approaching retirement
Experiencing a major family change
Receiving proceeds from a business transaction
Changing investment objectives
Revising charitable giving goals
A financial plan can provide a framework for evaluating these changes and considering how one decision may affect other areas of the financial picture.
A Financial Plan Should Reflect the Person
A personal financial plan sample is useful as a framework, not a prescription.
Two people with identical incomes may need very different plans because their businesses, families, tax situations, risk tolerance, assets, and goals differ.
A business owner with substantial company equity may need to consider business transition planning and liquidity. An employee with primarily retirement and investment accounts may have different priorities. A family with significant real estate holdings may need to consider property income, taxes, financing, and estate planning.
Compound Wealth is one example of a Wisconsin firm that coordinates tax planning, accounting, wealth management, and business transition services within its financial planning model.
The value of a financial plan comes from organizing the decisions that matter, understanding how they connect, and periodically reviewing whether the plan still reflects the person's circumstances.
Conclusion
A sample personal financial plan can provide a useful starting point for understanding how different areas of financial life may fit together.
A plan may include financial goals, cash flow, emergency reserves, investments, retirement, tax planning, business considerations, estate planning, insurance, and a process for periodic review.
The appropriate structure depends on the individual or family. Someone with straightforward finances may need a relatively simple framework, while a business owner or high-net-worth family may have additional considerations involving business interests, real estate, taxes, investments, and future liquidity.
The key is to create a planning framework that reflects the decisions that matter to you and can be adjusted as your circumstances change.
Frequently Asked Questions About Sample Personal Financial Plans
What should a personal financial plan include?
A personal financial plan may include financial goals, cash flow, investments, retirement planning, tax considerations, risk management, estate planning, and major financial decisions.
What is an example of a personal financial plan?
A hypothetical plan could include income, expenses, emergency reserves, investments, retirement savings, tax planning, estate considerations, insurance, and a schedule for reviewing the plan.
How often should a personal financial plan be updated?
Many people review their plans annually, while individuals with business ownership, significant income changes, or major transactions may review their plans more frequently.
Should taxes be included in a financial plan?
Tax considerations can affect investments, retirement withdrawals, business distributions, charitable giving, and other financial decisions, making them relevant to many personal financial plans.
How does business ownership affect personal financial planning?
A business can represent a significant portion of an owner's wealth. Business income, distributions, equity concentration, succession, and a potential sale may therefore become part of personal financial planning.
What is a sample financial plan for a business owner?
It may combine household cash flow, business income, investments, retirement, tax planning, business transition considerations, estate planning, and liquidity planning.
How should I organize my financial accounts?
A useful first step is to create an inventory of bank accounts, investment accounts, retirement accounts, real estate, business interests, insurance policies, debts, and other significant assets and obligations.
Can a financial plan include estate planning?
Yes. Financial planning can identify estate-related considerations and organize information for coordination with an estate planning attorney.
How does tax and wealth planning fit into a personal financial plan?
Tax planning can be considered alongside investments, business income, real estate, retirement, and other financial priorities. Coordinating these areas can provide a clearer view of how individual financial decisions may affect one another.
How do I choose someone to help create a financial plan?
Consider the services offered, planning process, communication style, relevant experience, fee structure, and whether the relationship fits your financial circumstances and objectives.
If You Have Any of These Questions, Contact Compound Wealth
What should my personal financial plan include?
How can I organize my financial accounts before creating a plan?
How should business income fit into my personal financial plan?
What tax information should be included in financial planning?
How should I prepare financially for a future business sale?
How can I coordinate retirement and tax planning?
What information should I bring to a financial planning meeting?
How often should my financial plan be reviewed?
How can investment and tax planning be coordinated?
How should I plan for a major liquidity event?
How can I incorporate estate planning considerations?
What financial planning issues are common for business owners?
How can accounting information support my financial plan?
How can real estate holdings affect my personal financial plan?
What financial decisions should prompt a review of my existing plan?
About Compound Wealth
Many financial decisions involve more than one area of expertise. Compound Wealth provides integrated tax planning, wealth management, accounting, and business transition services so clients can evaluate financial decisions within a broader planning framework. This collaborative approach supports thoughtful conversations across multiple areas of financial life.
