Create Your First Financial Plan

Introduction

If you need to Download and Install the correct version of software for you and your computer, please do so now by following the Getting Started guide.

Please ensure you followed the guide to Open Your First Financial Plan.

When creating your first financial plan, you’ll want to focus on the current year to start your new plan. With all information for the current year entered for all features, your plan will automatically forecast the data you entered into the future, which will become the basis for your new financial plan.

After you’ve completed this guide for the current year, you may want to enter data for the previous year as well, which is highly recommended. By adding data for the previous year, you’ll have solid and final numbers for all information being entered, which may especially affect how you create your current year budget. Having an ideal current year budget in place, will substantially affect the ability of the software to forecast your plan.

After all data is entered for the current and previous years, you may want to enter data for all historic years as well, but that may come later. Entering historic year data is not required and will not affect the ability of the software to forecast your plan, but you may find historic information useful for your own personal reasons.

Preparation

In preparation for creating your first financial plan, you’ll want to collect all the latest statements, documents, etc. for everything affecting your financial life (including for your spouse or partner), such as:

Don’t worry if you don’t have all of this information to start. You can start a financial plan with the information you do have quickly available as long as you have the information that is most important to you.

Data Entry

Once you’ve collected the information about your financial accounts, income, loans, and expenses, etc., you will want to start entering that information into the software to create your first financial plan.

If you don’t have all of that information readily available or just want to get started, you can enter data that’s as close as what you recall as possible. You can always come back later and enter exact values once you do have a chance to collect all of the information.

Setup

Start on the Setup sheet and enter the following information:

The remaining fields for Child College Funding Information and Future Events Information may use their default values for now, though if there is anything you see there that you definitely want to change, please feel free to change it, but you can always come back later and change these setup values at any time.

Assumptions

From the Setup sheet, you can link to the Assumptions sheet.

The assumptions are the underlying information that the software uses to forecast your plan. Even minor adjustments to the assumptions can have a large impact to your plan over time.

The assumptions that the software uses don’t need to be updated often, but when starting your new financial plan, there are some fields you should personalize. You should visit the Assumption sheet at least once a year to ensure the personalized fields are still accurate year after year.

The assumptions that should be personalized to start are highlighted yellow. Those assumptions should be:

The remaining fields for all of the additional assumptions may use their default values for now. It is not recommended that you change any of the other assumption values until you are able to complete the first financial plan.

IMPORTANT: In particular, it is not recommended that you change the inflation or market return assumptions. The inflation and market return assumptions are automatically calculated from actual annual values. If you manually enter inflation and market return assumption values, the software will no longer be able to automatically calculate them for you.

Child College

Go to the Child College sheet by clicking the tab at the bottom of the window.

Please note the intended use of this sheet is for child college investment accounts, such as 529s, Coverdells (or ESAs), or any other child education investment type of account.

Tabular Section

Find (scroll to) the current year’s row in each child’s contribution table and, using the information you gathered during preparation, enter the following:

In order to automatically calculate the appropriate monthly contribution for the current year, you may use a built-in function that is accessed via the Actions menu () at the top of the window and click the Calculate Monthly Contribution button, which will allow you to select the child you’d like to automatically calculate. The Monthly Contrib value will automatically update in the corresponding child’s table in the Budget sheet.

Banking

Go to the Banking sheet by clicking the tab at the bottom of the window.

Please note the intended use of this sheet before adding all of your bank accounts:

Information Section

Setup each one of your bank accounts by entering the following information in each account’s information section:

Tabular Section

Find (scroll to) the current year’s row in each account table and, using the information you gathered during preparation, enter the following:

The remaining fields for the current year’s row in each account table may use their default values for now. It is not recommended that you enter any other values until you are able to complete the first financial plan and have an ideal current year budget in place. The Monthly Deposit field will automatically update with the corresponding value from the Budget sheet, once you have a budget in place.

Investment

Go to the Investment sheet by clicking the tab at the bottom of the window.

Information Section

Setup each one of your investment accounts by entering the following information in each account’s information section:

Tabular Section

Find (scroll to) the current year’s row in each account table and, using the information you gathered during preparation, enter the following:

The remaining fields for the current year’s row in each account table may use their default values for now. It is not recommended that you enter any other values until you are able to complete the first financial plan and have an ideal current year budget in place. The Monthly Deposit field will automatically update with the corresponding value from the Budget sheet, once you have a budget in place.

Retirement (or Independence)

Go to the Retirement (or Independence) sheet by clicking the tab at the bottom of the window.

Information Section

Setup each one of your retirement accounts by entering the following information in each account’s information section:

Tabular Section

Find (scroll to) the current year’s row in each account table and, using the information you gathered during preparation, enter the following:

The remaining fields for the current year’s row in each account table may use their default values for now. It is not recommended that you enter any other values until you are able to complete the first financial plan and have an ideal current year budget in place. The Monthly Contrib field will automatically update with the corresponding value from the Budget sheet, once you have a budget in place.

Income

Go to the Income sheet by clicking the tab at the bottom of the window.

Information Section

Setup each one of your income sources by entering the following information in each income information section:

The remaining fields in the Deduction Information area may use their default rates for now, some of which are provided from the Assumptions sheet that was updated earlier. If you didn’t update the assumptions earlier, you may want to determine what each of these deduction rates should be by using the following calculations. The goal in determining these deduction rates is that for the current year row in the income table, the Monthly Net Income is equal to what your paystub shows when all deduction amounts are subtracted from the Monthly Gross Income amount.

Tabular Section

Find (scroll to) the current year’s row in each income table and, using the information you gathered during preparation, enter the following:

The remaining fields for the current year’s row in each income table may use their default values for now and will automatically calculate based on what you’ve entered above.

Debt | Asset

Go to the Debt | Asset sheet by clicking the tab at the bottom of the window.

Information Section

Setup each one of your debts/assets by entering the following information in each debt/asset information section:

Tabular Section

Find (scroll to) the current year’s row in each debt/asset table and, using the information you gathered during preparation, enter the following:

The remaining fields for the current year’s row in each debt/asset table may use their default values for now and will automatically calculate based on what you’ve entered above.

Budget

Go to the Budget sheet by clicking the tab at the bottom of the window.

First, a little background about the yearly month-budget. You may enter as little or as much detail (line items) as you like. The more detail you enter the more accurate your overall plan will be, but it will also be more for you to maintain from year to year. It’s recommended that you attempt a fair balance of detail by focusing on larger cost items and grouping together smaller cost items. It’s also recommended that you properly allocate income and expenses appropriately for spouses (or partners) to maintain positive budget reserves for each, so the software can accurately forecast your plan.

Find (scroll to) the current year’s columns and, using the information you gathered during preparation, enter data into the following sections:

Income Sections

There are three (3) income sections: Gross Income, Income Deductions, Net Income. There is nothing for you to enter in these sections. All income sources defined on the Income sheet will automatically update here. If the income shown here doesn’t look correct or you need to add more income, please go to the Income sheet to confirm or update your income sources there.

Expenses Sections

There are three (3) expenses sections: Consistent Expenses, Inconsistent Expenses, and Expenses to Escrow. The majority of the data you will enter will be done within these sections.

Expenses, Consistent

Any consistent (fixed) expenses you have from month-to-month will be included in this section. These kinds of expenses will include your housing, vehicles, phone, childcare, etc.

Once you’ve added income sources, a default budget list with default values will be shown to you. There are several linked expenses that automatically update based on the items you entered on the Debt | Asset sheet. For those linked expenses, they should already exactly match your actual expenses for those items and you may manually retype those values here to “lock them in.” If they do not match, you should revisit the Debt | Asset sheet and ensure the items are properly configured. For the unlinked expenses, you may overwrite the default values shown here with your actual expenses. If you don’t have a particular expense, you may simply delete the default value or enter a zero ($0) for it.

To add additional consistent expenses, which might be for other items you added on the Debt | Asset sheet that aren’t linked by default, you may click Insert new item in this section. With a new line item added, you may either select an existing debt/asset or manually enter an expense name and then enter your actual expense value.

Expenses, Inconsistent

Any inconsistent (variable) expenses you have from month-to-month will be included in this section. These kinds of expenses will include your groceries, clothes, entertainment, etc. Typically, these expenses are made up of many smaller expenses that occur throughout a month and may vary considerably from month-to-month, but when averaged (smoothed) for an entire year will yield a relatively stable value that we can enter here.

You may overwrite the default values shown here with your actual expenses. If you don’t have a particular expense, you may simply delete the default value or enter a zero ($0) for it.

To add additional inconsistent expenses, you may click Insert new item in this section. With a new line item added, you may enter an expense name and then enter your actual expense value.

Expenses to Escrow

This section is to show you the total of all consistent and inconsistent expenses that are marked by you as needing to be personally escrowed monthly. There is nothing for you to enter in this section.

Savings Sections

There are two (2) savings sections: Banking and Investing. Any banking or investment accounts you added on the Banking and Investment sheets, respectively, will be shown here. If there’s a banking account or investment account you’d like to see shown here that isn’t, please go to the appropriate sheet to ensure your accounts are properly configured.

Banking

For each bank account shown, you may use the default value or enter a custom value. The value that’s shown here (or entered by you) will automatically update to the appropriate account on the Banking sheet.

Investing

For each investment account shown, you may use the default value or enter a custom value. The value that’s shown here (or entered by you) will automatically update to the appropriate account on the Investment sheet.

Yearly Amount Sections

There are two (2) yearly amount sections: Planned Yearly Amounts and Unplanned Yearly Amounts. These sections are used to keep track of any yearly income or expense events that occur during the year.

These budget yearly amounts will be added or subtracted from the Banking 1 account, which should be designated as the emergency savings account.

IMPORTANT: These amounts are total amounts for the year and are not divided across the months of the year. For instance, if you have an appliance (refrigerator) expense for your house in a given year that cost $1800, you would enter the expense as $1800 in these sections — not as $150 ($1800/12 months).

Planned Yearly Amounts

Any expenses that are related to events that occur for your household members or items you entered on the Debt | Asset sheet will be automatically linked and updated here. For those linked expenses, they should already closely match your actual expenses for those items and you should enter any actual values here to “lock them in.”

Unplanned Yearly Amounts

Any other fully unplanned expenses that occur during the year for your household, should be added here. However, when an unplanned yearly expense does occur for a given year, you should update any other sections or sheets of your plan to make it a planned expense for future years, when possible.

Worth

Go to the Worth sheet by clicking the tab at the bottom of the window.

Find (scroll to) the current year’s columns. Your household’s net worth will automatically be shown here based on all of the data you entered above.

For any life insurance amounts you have, you will want to enter that data here, using the information you gathered during the preparation.

KPIs

Go to the KPIs sheet by clicking the tab at the bottom of the window.

There is nothing for you to enter on this sheet. You will use this sheet to analyze your financial life and to understand what kind of adjustments you may need to make to your budget for a successful financial life.

Dashboard

Go to the Dashboard sheet by clicking the tab at the bottom of the window.

There is nothing for you to enter on this sheet. You will use this sheet to analyze your financial life and to understand what kind of adjustments you may need to make to your budget for a successful financial life.

Analysis

Review the Dashboard and KPIs sheets to understand your current financial life situation.

If the budget reserve sections show any negative values, you will want to adjust your current (or possibly future) budgets, as appropriate, to bring the budget reserve sections to positive values.

Read the help text provided by the red ticks () with the labels. On the KPIs sheet, if you don’t see the red tick help text for a label, make sure you scroll all the way to left on the sheet. While you want most KPIs to always be green, there are some KPIs that are intended to eventually turn green (as you approach retirement), so you will want to ensure you understand those. If not everything is green when you create your first financial plan, that’s okay. You can make adjustments to your financial plan now to ensure the KPIs eventually turn green.

On the Dashboard, you’ll want to see that your Plan’s Future Success Probability is as close to 100% as possible — the higher the better. If you’re not anywhere close to 100%, then you need to make adjustments to your budget now to ensure a successful financial life.

While the Dashboard and KPIs provide a generally accepted guide to what will result in a successful financial life, only you know what you consider to be a successful life and your financial life will follow, so ensure your financial plan will lead to what you consider a successful life.

Adjustments

The most impactful adjustments you’ll make to your financial plan will be on the Budget sheet, since what you enter there will affect the future expenses you anticipate. Additionally, ensure you’re properly accounting for all of your debts/assets, income, retirement accounts, investment accounts, banking accounts (especially your emergency fund), and your child college savings.

You’ll want to ensure your financial plan lines up with reality and that you continue to maintain your financial plan at an interval (monthly, quarterly, yearly, etc.) that is sufficient for you to feel comfortable with your plan.

We want to congratulate you on taking the initiative to create your first financial plan with us and we want to thank you for trusting us with the success of your financial life!