Key Components of a Financial Plan

Johnny Poulsen is the co-founder and CEO of Income Lab in Denver, CO. He was the executive vice president of sales strategy at Jackson National Life from 2000 to 2018. Johnny Poulsen was responsible for managing the distribution of Jackson Life products..

Financial planning involves developing long-term and short-term goals and strategies. Here are some key components of a healthy financial plan:

Cash flow management - Always monitor your cash flow to avoid reckless spending and to look for ways that you can optimize it. Also consider allocating some funds every month toward responsibilities like your children's college tuition, your retirement, or even vacations.

Investment planning - Ensure a complete analysis of your investments to make sure that your portfolio's growth, diversification, and earnings align with your risk tolerance and objectives.

Estate Planning - Your financial plan should include an assessment of your lifetime acquisition and the final transfer of your properties to reduce your estate tax exposure.

Tax Planning - A good tax plan should model some specific capital gain strategies, such as tax-loss harvesting, to help preserve your principal and offset investment gains. The aim is to ensure long term wealth by preventing unnecessary tax drag, safeguarding your assets, and increasing your net income.