Using Quick Plan: a brief introduction to financial planning

Just as a gym class helps your health and fitness, financial planning can help you build confidence in your financial future. Running your first Quick Plan on the MyFinanceFuture Planner is a bit like a trial session at the gym - it gives you a rough idea of where you currently stand against your goals. Similarly, Quick Plan can also help you understand what financial planning is all about, how it can help, and whether it's for you.

First, create a Quick Plan

If you haven’t had a chance to try out Quick Plan yet, then try creating a Quick Plan now (you’ll be prompted to create an account first if you don’t already have one). You can do this either on your phone or a desktop; the phone might be more convenient, and you’ll find the desktop version offers some more detail in the results screen.

Now you have your first Quick Plan – perhaps you created one previously - take a more in-depth look at the results, and ask yourself some questions.

Which questions should I ask?

Quick Plan is a high-level planning tool, which uses default values for many factors that would influence the plan in real life, to allow you create an initial plan quickly. These defaults might not be right for you and can - and should - be changed at a later stage in the planning process. Nonetheless, your Quick Plan does allow you to get an initial, high-level view of how well prepared you are financially, and how realistic your current plans are. So, whilst you won’t be able to answer all your financial questions about the future using Quick Plan, you can ask some overall questions and get an initial indication of where you stand.

So, which questions should I ask?

1. Does the plan cover all my finances?

Firstly, before looking at the results, think again about the information you put into the Quick Plan entry screen. Did it really cover all your finances? If not, then the result isn't a complete projection of your financial future. So, edit the plan to add in any missing information to create a more complete picture.

2. What does the resulting projection show?

Take a look at the results in the Quick Plan Summary screen. Does it show a lifetime shortfall? If so, then your plan is projected to run out of money before you die in the average case (i.e. with average market conditions and average lifespan). Alternatively, with no lifetime shortfall, the projected End-of-Lifetime Value (desktop version only) likely includes a cash surplus in addition to any property and other assets.

3. How is my retirement being funded?

Take a look at the chart (Lifetime Expense Funding), which shows how expenses are funded in each year of the plan (i.e. income versus withdrawals from savings and investments). Next, select the "Detailed" view using the toggle under Chart Views & Filters (desktop version only). This reveals some more detail on the splits between guaranteed incomes (e.g. state and defined benefit pensions) and other income, such as employment earnings; and between withdrawals from cash savings and other investments.

4. What is my projected net worth?

Select the Lifetime Assets & Debts chart (under "Select Chart" on the desktop version, or below the main chart on the mobile version), which shows a projection for how your net worth changes over your lifetime. This includes both fixed assets - such as your home - and savings and investments, which may increase as you save during your working life and reduce as you withdraw after retirement.

5. What story is this telling?

Think about the results of the projection and the story it’s telling. Does it show your finances playing out as you expected? Does it show you retiring when you planned? Having sufficient funds to cover your lifestyle, both before and after retirement? Leaving a legacy, or running out of funds in later life?

If the story your Quick Plan tells isn’t the one you want, then try making changes to your plan. See what you can do to align it more closely with your goals. So, what can you do, and how should you approach this? That’s the subject of our next post, focused on using Quick Plan to explore your options.

MyFinanceFuture Services Ltd does not offer regulated financial or professional advice.

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