On 9 January 2007, you could argue that a groundbreaking moment changed the world of technology forever.

Steve Jobs, the then-CEO of Apple, took to the stage at the Macworld Expo in San Francisco in his signature black turtleneck to announce “three revolutionary products”.

He remarked that, “The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough internet communications device.”

Then came the twist, as Jobs explained, “These are not three separate devices. This is one device, and we are calling it the iPhone. Apple is going to reinvent the phone.”

What made this moment so compelling wasn’t just the innovation of individual features, but how they combined into a single, ingenious product.

The iPhone showed that when elements work together, the result is, as Aristotle once put it, “greater than the sum of its parts”.

Similarly, your financial plan might seem like a collection of somewhat unglamorous elements at first glance.

Though, when combined, these constituent parts come together to help you achieve your goals by taking a top-down holistic approach to your financial situation.

With that in mind, continue reading to discover five of the key components of a financial plan, and how they work together to give you confidence in your financial future.

1. Your budget is the foundation of your plan

It’s fair to say that a budget is the cornerstone of a sound financial plan. It allows you to understand where your money is going and ensures your spending aligns with your priorities.

By tracking your income and expenses, you gain valuable insight into how you use your wealth and might even identify opportunities to save or cut unnecessary costs.

This can provide the confidence in knowing that you’re living within your means.

Working with a planner can elevate your budgeting through sophisticated cashflow modelling software.

By inputting details about your income, expenditure, and assets, alongside variables such as inflation or investment returns, you can visualise how your financial decisions today might affect your long-term financial security.

This essentially allows you to test for different scenarios to see how these changes would affect your future.

2. Focusing on savings allows you to build stability

Once you have a clear budget, the next step is establishing savings targets. These are another essential component of your financial wellbeing, as they can provide both immediate and long-term security.

A wise starting point is an emergency fund. This safety net could help you handle any unexpected costs without exhausting funds earmarked for other purposes.

Aside from emergencies, focusing on savings allows you to achieve short-term objectives by diverting wealth to typically low-risk savings accounts.

For longer-term goals, your financial plan could help you figure out how much to save and the most suitable accounts or investments to reach them.

Ultimately, all these parts combine to help you create a sense of stability, build discipline and healthy savings habits, and work towards your long-term goals.

3. Pensions and investments allow you to secure your future

Retirement is undoubtedly a significant milestone. So, a key part of your financial plan is ensuring that you’re on track to have enough income to support your dream lifestyle in the next phase of your life.

Your financial plan considers the pensions you’ve already set up, ensuring that they align with your retirement goals. It also identifies ways to boost your savings, and each pension contributes to the overall picture.

Similarly, investments play a key role in helping you grow your wealth and achieve your financial goals.

As such, it’s important to take your attitude to risk into account, and craft a portfolio with a level of risk that’s suitable for you.

By combining pensions and investments within your financial plan, you could ensure you’re on track to secure a fulfilling retirement while having the flexibility to adapt to any changes along the way.

4. Protection offers invaluable peace of mind

While you might think that wealth accumulation is the main goal of your financial plan, protecting what you have, and love, is equally important.

Imagine how you or your loved ones might cope financially if you were unable to work due to illness or injury or if you unexpectedly passed away.

This is where financial protection comes into play, such as:

 

  • Income protection
  • Critical illness cover
  • Life cover.

 

As part of your plan, you may want to assess your needs and determine the appropriate levels of cover, offering peace of mind that you’ll still be able to reach your goals no matter what life throws your way.

5. Estate planning allows you to get your affairs in order

A key aspect of your entire financial situation is your estate plan. This ensures that your wealth is distributed according to your wishes, as tax-efficiently as possible, when you pass away.

Indeed, your estate plan is essential for minimising Inheritance Tax (IHT) and providing for your loved ones after you’re gone. A clear and well-written will reduces the risk of disputes after your passing and ensures your legacy aligns with your wishes.

Whether it’s drafting a will, setting up trusts, or exploring IHT-efficient strategies, including your estate within your financial plan can give you the confidence that your affairs are in order.

Your planner can bring the whole thing together

Just as Steve Jobs was essentially the architect of the iPhone’s all-encompassing features in a single product, your financial planner can orchestrate the individual elements of your financial situation into a cohesive plan.

They won’t stop there, though, as planning is an ongoing process. This means that your planner will work closely with you over the years to adapt your plan and ensure it continues to reflect your circumstances and wishes.

To find out how we could craft you a bespoke and in-depth plan that includes all these individual parts (and maybe more), email hello@cordinerwealth.co.uk or call 0113 262 1242.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.