The Financial Planning Workbook: A Comprehensive Guide to Building a Successful Financial Plan (2025 Edition)

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Contents

Chapter 1: Preparing Your Financial Plan

Chapter 2: Income Planning

Chapter 3: Determine Your Net Worth

Chapter 4: Investments

Chapter 5: Retirement Planning

Chapter 6: Insurance

Chapter 7: Dependent Planning

Chapter 8: Estate Planning

Epilogue: Your Next Steps

About the Authors

1

Preparing Your Financial Plan

Welcome to The Financial Planning Workbook. Our goal is to help you build or repair your financial plan using the proven methods and exercises outlined in the following chapters. Inside this book you will be introduced to the practice of personal financial planning and you will learn how to create and monitor a successful financial plan. But before you can begin your path to financial independence, you first need to identify your starting point. By recognizing where you are today, you’ll be able to set tangible goals and track your success from this point forward.

Exercise 1.1: Identifying Your Habits

For this exercise, indicate which of the following statements apply to you. The chapters that follow will help you break these poor financial habits and replace them with responsible alternatives.

• I routinely carry a balance on my credit cards that I’m unable to pay in full each month.

• At least one of my credit cards is currently maxed out.

• I’ve had to borrow money from family or friends to pay my bills within the last year.

• I do not have any money saved for emergencies.

• I don’t bother balancing my checkbook or reconciling my bank statements at the end of each month.

• I’m not sure whether my employer offers a retirement plan or a company match.

• I’m not sure how much I’m currently saving towards retirement.

• I haven’t reviewed my investments within the last year.

• I don’t have a will, living will, financial power of attorney, or healthcare power of attorney.

• I haven’t given serious thought to when I’d like to retire or how much I plan to spend during retirement.

• I’m not sure what would happen if I became disabled and couldn't pay my bills.

• I’m not sure if my family would be financially stable if I were to die.

Exercise 1.2: Evaluating Your Current Financial Plan

Now that you’ve identified the parts of your financial plan that may be failing you, it’s time to assess your strengths. Indicate whether the following statements are satisfactory or need improvement.

• My ability to set realistic and attainable financial goals

• My ability to create and maintain a budget

• My ability to save money

• My credit score

• My understanding of the investments I have and their associated risks

• My current level of retirement savings

• Life and disability insurance premiums, deductibles, and coverage amounts

• Home, auto, and umbrella insurance premiums, deductibles, and coverage amounts

• My overall estate plan

Exercise 1.3: How Well Do You Know Your Financial Situation?

Maybe you’ve identified a few bad habits that you’d like to break and you realize that a fair amount of your financial plan needs improvement. It’s unlikely that you’ve intentionally made poor financial decisions that led you to this point; it’s much more likely your financial plan has been failing you because you simply aren’t aware of the many intricate details involved. To explore this possibility, indicate which of the following statements are true regarding your present financial situation.

• I know how much I earn and how much I spend each month, and what my savings surplus or deficit is.

• I know the value of my assets, liabilities, and net worth within a few thousand dollars.

• I have recently reviewed the various lines of insurance that I have and discussed their adequacy with my insurance agent.

• I have met with my accountant to discuss tax planning strategies within the last year.

• I understand the basic characteristics of the various investments that I own and they match my tolerance for risk.

• I know how each of my investments has performed over the last year.

• I know the fees associated with each of my investments.

• I know the current balance of my investment accounts within a few thousand dollars.

• I participate in my employer’s retirement plan and take advantage of the company match.

• I make the maximum contribution to my IRA each year.

• I have reviewed my credit report and checked my credit score within the last year.

• I know how much