What Is Comprehensive Financial Planning?

Financial plans assign money values to every aspect of your life.
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An old joke says, "I can't be out of money. I still have checks left in my checkbook!" A comprehensive financial plan eliminates the shock of discovering you've spent more money than you have. The "comprehensive" aspect involves looking at every activity of your life to see how much it costs you or how much money it makes for you. Planning also helps you find realistic ways to make your dreams come true.


A comprehensive plan starts with an evaluation of where you are. Your household budget has to balance out income and expenses. It's a simple process of writing down income in one column and expenses in the other and totalling them up. The planning part comes in if they don't match. You would then have to decide which expenses to cut, or find new ways to make additional income.


When you buy insurance, you are planning for the future. You may not "plan" to have an accident when you buy car or health insurance, but you do plan how you would pay for a mishap. Comprehensive planning includes all your insurance needs, such as life insurance, disability insurance, mortgage insurance and long-term care insurance. Of course, you have to balance what coverage you want with what you can afford. That process is part of comprehensive financial planning.


You might not have thought about taxes as something you can plan, but to some extent, you can. For example, you can reduce your tax burden by contributing to a retirement account. You can also cut your taxes by researching all the tax credits that are available to you and by making sure you take every deduction you have coming. Your comprehensive plan can also explain where you will get the money to pay taxes each year. For example, you could plan to set aside money in a special account or increase your withholding amounts at work if they have been falling short.

Estate Plan

Your comprehensive approach includes things like a will or setting up a trust. When you make your plan, you decide who inherits what. While it might not seem like much fun, estate planning can actually be the most loving part of your overall plan. It's a time to think about what you want to leave your loved ones.


You can determine how much money you'll have to live on during retirement. Your plan can include income from retirement savings through IRAs and 401(k) plans, as well as Social Security benefits. You can estimate your benefit online at ssa.gov/estimator. If it looks like your income will fall short of what you want, your plan can include starting a business or taking part-time work.


You can consider investments that aren't part of your retirement savings. You can invest in stocks, bonds, mutual funds and even real estate as a way of financing your dreams. For example, if you want to travel, your investments can pay for that. You can plan investments that will help pay for college, a second home or new car. Your comprehensive plan includes designating how much money you want to set aside each month for investing.

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