How To Review Your Financial Plan

Financial BudgetThe subject of budget has been a recurring topic at home these past weeks. With all the news around real estate cost and families struggling to balance their budgets, my wife and I were discussing why so many struggle. Could it be that families don’t have the education that goes along with earning accounting certificate programs?

My point of view is that most families don’t really know where their money goes. If you don’t know where your money is going, how will you know if you can easily pay your bills, afford that nice vacation trip or even retire. Understanding your finance is the source for financial success. Until you do, you will struggle and not know for sure where you stand.

My wife wanted to know more budgeting and tools to help budget so I started putting together a budget spreadsheet. It quickly turned into a cash flow spreadsheet and after not long, I had a financial budget spreadsheet. Numbers are awesome – I admit that I was geeking out a little 🙂

My fresh Financial Budget awaits your review here: Financial Budget on Google Template. Read on for more details and a comparison with a financial advisor plan.

Financial Plan

Let me smart by saying that I could have picked a budget spreadsheet out there since there are many of them but most of them are limited to understanding what you are doing with your money today and how you can be left with more. What I find is missing from those budgets is the relationship between your daily, monthly, or annual spending with your retirement plan.

The reality is that finance starts with understanding where your money goes and that’s just the beginning of the journey. The budget leads directly to a financial plan for retirement. I had not realized it until I started stringing the different tables and data I had built over time in one spreadsheet. What I came to also discover is that it matches what you get from a financial planner (without the recommended investments). Your budget basically leads you to a financial roadmap and all you need to do is update it annually. The end goal is your ability to retire.

What You Get From A Financial Advisor

Dividend Snapshot
When I was in my 20s, I was as focused on my finances as I am now without all the knowledge and I used an advisor. This is the summary I remember getting in our initial series of meeting. It was prepared in a nice binder and the focus was on selling me products obviously.

  • You get to understand your saving rate (it’s what they need to sell you products)
  • You get to prioritize your savings between short, medium or long (paying debt, TFSA, RRSP, RESP, …)
  • You define your investment risks
  • You define your retirement goals (when and how much) and get a figure. It’s a big number that takes into consideration inflation and what you think you will need in retirement –  a lot is very hypothetical but the large amount tend to make you want to invest right now and get going.
  • You review your family plan if you have kids – i.e. life insurance coverage

What You Get From My Financial Budget

As I was putting the budget together to show my wife, I realized how great of a tool it can be for everyone. Starting from a budget and understanding the costs of retirement can put someone’s savings in perspective. Not to mention the understanding of what the withdrawal rate of a portfolio with inflation does to a bank account. It allows for anyone to see the big picture of their financial life. That’s even before investing.

Here is what you get:

  • A family income review with taxes by provinces (as a bonus, you can compare your taxes by province)
  • A categorized view of your spending
    • Housing
    • Transportation
    • Food
    • Savings (RRSP, RESP, …)
    • Vacation
    • Driscretionary
  • A derived retirement cost based on current budget and categories
  • A derived retirement portfolio with growth based on your budget
  • A derived retirement plan based on your cost of living (owning vs renting) with inflation and portfolio growth

All in all, I feel anyone could get a good overview of their financial plan with my financial budget and revise it annually. What’s left to do for anyone is to invest smartly to really grow that nest egg for retirement. For a full proof process, setup a recurring event in your calendar of choice (mine is Google Calendar) to review where you are at every year or quarter simulating a meeting with a financial advisor :). While you are at it, do a portfolio review to make sure your investments are still on track.

I’d love to hear your comments on the spreadsheet. Anything wrong? Anything missing? Loving it? Drop me a comment as I have tried to provide more than just tracking the spending habit of a family but also highlight the financial projection of a life style. The spreadsheet will be available in my resources section as well.

One last time, here is my Financial Budget on Google Template.

Readers: What do you think of the spreadsheet? Already using one?


7 Responses to "How To Review Your Financial Plan"

  1. It’s great to see that your wife is also interested in planning the family’s finances. You two seem like a good team. I have multiple financial budgets for the long term. One if I get married, start a family and the Mrs. doesn’t work. Another is with a duel income household. And finally one where I stay forever alone. I didn’t break down the spending by specific categories though so it’s very basic. It’s fun because I imagine all sorts of interesting things I can do with my finances in the future, and the freedom I will have.

    1. The Passive Income Earner · Edit

      @Liquid Independence,
      Thanks. My wife has been learning alongside me since we got married. Budgeting has not always been easy as I have had to take away the credit card once.

      It’s always easy to be tempted to go through life inflation but it’s important to be clear on what you do as a family. For example, we have RRSP and RESP and many of her friends have no RESP and little RRSP but they spend more than us. It’s often surrounding these concepts that we have discussions.

  2. Geeking out indeed! 🙂

    Kidding aside, you’re like me. I like spreadsheets.

    I think what you wrote about above was great.

    I have a few, one about our stock and ETF holdings demonstrating month-to-month dividend income, another that forecasts our retirement income needs in today’s values, and another present day cash flow/expenditure worksheet. The last one, I should post on my site.

    I find the cash flow/expenditure worksheet really helps. I don’t budget per se, rather, forecast our income and expenses and balance the cash from there. I work on that one almost every other day.

  3. Nice! Being a newcomer in this field, got to learn a lot of tips from your content. Obviously budgeting is the toughest as well as easiest planning at the same time. It depends upon the person how he handles the whole situation. Its amazing to know that your wife has been your ideal companion even in the financial sector as well. When a couple together cope up with a situation and make a planning, it gets easier for a family to run, dealing with personal finance at the same time.

    1. The Passive Income Earner · Edit


      One of the most important thing I have found in educating others around me is to start with small topics and really make sure it’s understood. For example, since we settle on a life style, when I get a raise, we usually invest it or pay off the mortgage. That way, there is no life style inflation.

      The biggest challenge for anyone starting is the life style inflation and keeping up with the jonesses.

  4. Thanks for the article!I absolutely agree with you that you will never become financially secure if you do understand your finances.Lots of people have trobles with planning their expenses and spend more money than they earn. It’s easier to spend money than to save it, that’s why lots of families act like this.Budgeting is a job, where you have no days off, it’s a team job where every family member should take part.I think the challenge is to raise right attitude to money,understand the balance between your income and expenses.It’s great that you and your wife take care of your budget and do a great time job.Your advices make sense and can help other people because you do and try everything you talk about and share your own personal experience.


Post Comment