How To Create Your Own Financial Plan

ScalpelCreating and managing a financial plan requires both a measure of skill and art.

The following are the areas we look at when creating, implementing and maintaining our own financial plan and those we help.

The best financial advice is simple, specific, relevant and achievable.

So when creating my own financial plan and helping others, what are the foundational pillars I use to ensure we have the greatest chance of success?

The answer. A combination of both skill and art. Just like a heart surgeon.

The Mechanic and the Heart Surgeon

A mechanic was removing a cylinder-head from the motor of a Harley motorcycle when he spotted a well-known cardiologist in his shop.

The cardiologist was there waiting for the service manager to come and take a look at his bike when the mechanic shouted across the garage.

"Hey, Doc, want to take a look at this?"

The cardiologist, a bit surprised, walked over to where the mechanic was working on the motorcycle.

The mechanic straightened up, wiped his hands on a rag and asked, "So Doc, look at this engine. I open its' heart, take the valves out, repair any damage, and then put them back in, and when I finish, it works just like new. So how come I make $39,675 a year and you get the really big bucks ($1,695,759) when you and I are doing basically the same work?"

The cardiologist paused, smiled and leaned over, then whispered to the mechanic.....

"Try doing it with the engine running."

Creating a financial plan is just the beginning, it then requires implementation and then ongoing maintenance mindful of changing personal, economic, legislative, political, tax and environmental micro and macro events. 

The following are some of the everyday checks, balances, research and maintenance to keep our plans in good health and ensuring us the greatest chance of success.

  1. Have access to savings for emergency situations, preferably three months living expenses
  2. Be in an occupation/business that allows you to fund and live your lifestyle aligned to your passion and values.
  3. Pay down your debts at a reasonable speed until you're debt free. If you have any debt at all ensure that it is investment debt i.e. tax deductible; still pay it down at a reasonable pace.
  4. Protect your cash flow/livelihood and assets. Achieved via insurance, contracts, ownership entities/estate, added value etc...
  5. Do not invest for the main benefit being a tax deduction.
  6. Buy and sell for a purpose/reason, not a speculation.
  7. Invest regular savings using the most tax effective vehicles i.e. superannuation, trusts etc...
  8. Reinvest back into your investment. Do this until you require the income from the investment and/or it is enough to meet your cost of living/business operational needs.
  9. Invest in that which will provide ROI (Return on Investment) to meet your cost of living without you losing sleep or experiencing excessive volatility that impedes your lifestyle cash flow.
  10. Invest the majority of your time in things within your control
  11. a) Exercise and eat right Improves health and self esteem,
  12. b) Self educate improves career opportunities,
  13. c) Make time for others improves personal relationships,
  14. d) Support others who are not as fortunate improves community participation,
  15. e) Spend money on experiences rather than materialistic objects
  16. f) Connect with your soul & nature for enlightened spirit

This post was written by Peter Horsfield, as such they are his personal views. Peter helps you to focus on what’s most important, the right strategies at the right time. To learn more about How to become Financially Independent visit Peter Horsfield Smart Advice 

About Peter Horsfield 

Peter Horsfield in an Authorised Representative and Investsure Holdings Pty Ltd ABN 16 050 286 630 as trustee for Horsfield Family Trust ABN 55 609 068 513 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523.


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Investsure Holdings Pty Ltd ABN 16 050 286 630 \(t/as Horsfield & Associates\) is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049, who holds an AFSL and Australian Credit License No. 236523.
Information published on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a qualified adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. Past performance of financial products is no assurance of future performance.