The Back of a Napkin Financial Plan: A Simple Way to Understand Your Finances
We are strong advocates of the benefits of financial planning. Done properly, it brings clarity, structure and confidence to decisions about money and the future.
However, for many individuals and families, the idea of “financial planning” can initially feel daunting. People often think of it as complex spreadsheets, technical jargon and a series of disconnected products such as pensions, ISAs or investments. In reality, effective financial planning is about stepping back and understanding how all the different elements of your financial life fit together.
One of the most valuable shifts that planning creates is moving away from focusing on individual pieces in isolation and instead looking at the whole picture. When you view your finances in a structured way, it becomes much easier to understand where you are today, what you are building towards and whether you are on track to achieve it.
In this guest article, David Jones introduces a refreshingly simple way to think about financial planning, what he calls the “Back of a Napkin Financial Plan.” Using just four key concepts, earn, spend, own and owe, he demonstrates how the foundations of a financial plan can be understood quickly and clearly.
He also explains the Rule of 375, a simple rule of thumb that helps translate a desired retirement income into an approximate level of capital required to support it. While not a precise formula, it can be a powerful way of bringing retirement planning to life and helping people ask better questions about their financial future.
Click the image to read the blog.
If you’d have a question about creating your own Financial Plan, then please get in touch via the form below or call us on 01825 76 33 66.
This blog is for information purposes only and does not constitute financial advice, which should be based on your individual circumstances.