How to Write a Financial Plan

Video Transcript

"I'm Joe Dunlop, I'm a consultant and and adjunct professor at Steven Henegars College in the business division. Today we want to talk about writing a financial plan. Financial plans can be looked at in very many different ways, but they come in to basic sections. First of all you need to have a financial goal. Usually that is in developing a retirement fund for an individual or for developing a project for a business. The next thing you need to look at is the funds that are available. In addition to looking at those funds you have to look at the opportunity costs that those funds may have. What else could you do with those funds if you were not doing this project or you were not setting them aside for some other goal. The next item we need to look at is how much is that going to cost. The rate of return is a very important item to look at. It will help you determine how much money you need to set aside, what is going to be generated through a project and how much that is going to return to the investors or to the person setting aside the funds. If the project does not give you a high enough return it should not be undertaken. If it's not going to grow at the pace that you need for retirement, you need to find a new vehicle. Writing a financial plan, you need to know where you're going and how you're going to get there. Then you need to figure out what is the best route to take in giving you the highest return on your investment."