As a business owner, you are probably fairly familiar with the ins and outs of a business plan. You likely review the main financial statements regularly to determine if changes are needed or if you are on target.
A personal financial plan has a lot of similarities with your business plan.
A good financial plan requires you to assess your current financial situation, to get an idea of what things look like today. This corresponds with how you use the company’s balance sheet.
Next action for a financial plan is to develop your short and long term goals. This would be similar to your business’ one year and three year projections, only the personal plan would have a longer time line.
After that, you select appropriate measures to achieve your goals and then implement the actions. Again, this is not unlike what you do with your business, just involving financial products rather than expansion, or product changes, hiring, etc.
Once the plan is in place, a routine review should be conducted to ensure you are tracking towards the target. The same as your annual year-end review of the business statements.
The biggest differences that most business people encounter is that while you have substantial knowledge about what to do to move your business forward, you probably are less certain about the available options for your personal financial plan. A good financial advisor can smooth out the process for you just like your accountant helps with your business.
Submission: Dan White
Daniel White, MBA, is a member of the Desjardins Financial Security Independent Network offering investment and financial planning services to small business owners and retirees.
