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Five Reasons to Create a Comprehensive Financial Plan

November 04, 2014

We create a planned shopping list before we go to the grocery store, we develop an itinerary when we plan a vacation and we follow a planned agenda for meetings at work. When we have a goal in mind, the likeliest way to achieve that goal is through thoughtful planning and execution. While most of us have financial goals in mind, research indicates that only 31% of families have created a financial plan. (2012 Household Financial Planning Survey)

Developing a financial plan allows us to take control of our money, assess our current financial situation, set goals and prepare a strategy to achieve those goals. By better understanding your finances, setting goals and creating a strategy, you will live more comfortably and with greater confidence.

Working with a qualified financial professional to develop a financial plan will help you define your goals. Typically, a financial planner will ask a series of questions to determine what is important to you financially. Given the level of income, the information uncovered during the question and answer process will help determine if the goals you have set are realistic. Consider these five steps and suggestions from our team at Manhattan Ridge to get started creating your financial plan:

1.     Gain a Better Understanding of Your Finances

Financial planning will help you to understand where you stand in the context of your own financial world. According to the National Association of Personal Financial Advisors, 56% of adults in the United States lack a budget. Many feel they don’t have enough money to even worry about what to do with the “extra”. Without knowing what money is going in or out of your household, planning for the future is impossible. A solid financial plan helps you to manage what you have and where you want it to go. Even for a family living paycheck to paycheck, a good money strategy can prepare a path to a savings plan. Understanding what you have to work with makes a huge difference in the potential of gaining and building assets.

2.     Set Realistic Goals and Measure Progress 

       A key aspect of a comprehensive financial plan is developing benchmarks by which you can measure your progress toward achieving your established goals. A financial plan should be revisited often to determine whether or not you are on course to achieving the goals and then readjusted to accommodate any changes in the overall financial environment.

3.     Maximize the Money You Earn and Keep

An outside perspective on your financial situation may help you identify new practical ways to save more money or increase the money you earn. Whether it be through investments that match your risk tolerances and goals or through employer sponsored flexible spending plans, the viewpoint of a professional can shed perspective on the saving and earning potential of your overall financial situation.

4.     Build Wealth

Developing a household budget and setting aside primary savings are two functions of most financial plans. Once these two necessities are in place, a financial planner can then develop and implement an investment strategy designed to match your level of risk and lifestyle goals.

5.     Increase Financial Confidence

The process of understanding your current financial situation, identifying goals and creating a financial plan adds confidence. According to a 2012 survey prepared for the Certified Financial Planner Board of Standards, 52% of people with a financial plan feel very confident about managing their money. This is in contrast to the 30% of people without a financial plan that express the same level of confidence.


The simple process of assessing your financial situation will help you identify ways to improve your financial well-being. Creating a financial plan is an important step for most people to achieve their financial and lifestyle goals. Working with a qualified financial professional will help ensure that you create realistic expectations and benchmarks for measuring your progress. Please contact Manhattan Ridge Advisors for help developing your personal financial plan.