What is a personal financial plan?
Ownvance's personal financial plan is a fixed-fee piece of work that sets out, in writing, where your money goes, how big your emergency fund should be, which debts to tackle first and what your goals will realistically need. It also shows how much you could put aside for the long term. We don't choose or buy investments for you.
What will you receive?
At the end you receive a written plan of a few pages in plain English, a simple spreadsheet holding your budget, emergency fund target and debt plan, and a session to go through both together. You keep everything, and you can update the spreadsheet yourself whenever your income or circumstances change.
- A written plan covering your budget, emergency fund, debts and goals, with the reasoning behind each number.
- A spreadsheet with your monthly budget, a target for your emergency fund and the order in which to repay debts.
- A clear split between the money to keep within reach and the money that could be set aside for the long term.
- A note of any questions that need a different specialist, such as a tax or pension question, if they come up.
- A walkthrough of the plan and the spreadsheet, so you can keep both up to date on your own.
Who is a personal financial plan for?
A plan helps anyone whose money feels disorganised, tight or about to change. That includes people with no savings cushion, people carrying card or loan balances alongside savings, people expecting a baby, a move or a new job, and people whose savings are building up who aren't sure what to do next.
- You reach the end of most months without knowing where the money went.
- One unexpected bill would go straight onto a credit card.
- You have savings and debts at the same time and aren't sure which to deal with first.
- Something big is coming: a new home, a change of job, a child, or a spell without work.
- Someone has suggested investing and you'd like to know whether you're ready.
How long does a personal financial plan take?
A personal financial plan usually takes one to two weeks from the introductory consultation to the walkthrough. Most of that time goes on gathering your figures: income, regular bills, everyday spending and debts. If you already keep track of your spending, it's often at the quicker end. Your engagement letter confirms the dates.
We tell you at the start exactly which figures we need, and you choose how to share them. We never need access to your bank accounts.
How do we build your plan?
We build the plan with you from figures you already have, in a set order. First what comes in and what goes out, then a cushion for emergencies, then your debts, then your goals. Only once those are settled do we look at how much money could be left alone for the long term, and for how long.
What comes in
Your take-home income, including anything irregular such as bonuses, freelance work or benefits, averaged out where it varies.
What goes out
Fixed bills first, then everyday spending, then the yearly costs that tend to catch people out, such as insurance renewals, repairs and birthdays.
Your safety cushion
An emergency fund sized from your own essential costs and how secure your income is, kept somewhere you can reach quickly.
Your debts
Every balance, rate and minimum payment in one place, with an order for paying them off that you can realistically stick to.
Your goals
What you want the money to do over the next few years and beyond, with a monthly figure next to each goal so you can see whether it's realistic.
How much should you keep within reach, and how much could you set aside?
We split your money into three parts. Everyday money covers this month's bills. An emergency fund covers your essential costs for a while if income stops or a big bill arrives. Only what's left after both, and after expensive debts are dealt with, counts as long-term money that could be left alone for five years or more.
| Part | What it's for | Where it usually sits |
|---|---|---|
| Everyday money | Rent or mortgage, bills, food, travel and the month's spending | Your current account, with a small buffer so you're never overdrawn by surprise |
| Emergency fund | Losing your job, illness, a broken car or boiler, an urgent trip | Easy-access savings you can reach within days, kept apart from your current account; check it's covered by the deposit guarantee scheme where your money is held |
| Long-term money | Goals five or more years away, if anything is left after the first two | Only somewhere you understand and could leave alone through falls as well as rises |
A common starting point for an emergency fund is three to six months of essential costs: more if your income is irregular or you work for yourself, and a smaller first target if you're paying off expensive debt. We size yours from your own numbers rather than a rule of thumb. Our guide to building an emergency fund works through an example, and investing education covers what to understand before any long-term money is invested.
Should you pay off debts before you save or invest?
Usually, expensive debt comes first. If a credit card charges far more interest than savings could reasonably earn, paying it down is the surest gain open to you. Most plans keep a small emergency fund going at the same time, so one unexpected bill doesn't push you straight back onto the card you've just cleared.
Not all debt is equal. A mortgage or a low-rate loan is usually best repaid on schedule, while card balances, overdrafts and store credit tend to cost the most. Your plan lists every debt with its rate and minimum payment, then sets an order for clearing them: highest rate first, or smallest balance first if quick wins help you keep going.
As an illustration only: a $3,000 card balance charged at 20% a year costs about $600 a year in interest if the balance stays where it is. Few savings accounts pay anything close to that, which is why clearing the card normally comes before saving more than a small cushion.
If repayments already feel unmanageable, speak to your lender and to a not-for-profit debt advice service before anything else. We can help you prepare for that conversation, but we don't negotiate with lenders or arrange debt solutions.
How often should you review your plan?
Glance at the spreadsheet once a month and review the whole plan once a year, or sooner when something big changes: a new job, a move, a child, a pay rise or a drop in income. Reviews are quick because the structure is already in place. You're only updating the numbers and checking that your goals still fit.
The plan is built so you can do this yourself. Should you want a second pair of eyes on it later, say before a major decision, we can agree that separately, under a new letter and fixed fee.
What won't we do?
We won't tell you which savings account, fund or platform to choose, move money for you, or accept anything from a provider. Ownvance isn't a regulated financial adviser and doesn't give tax, pension or legal advice. If your plan raises a question that needs one of those specialists, we'll say so and help you prepare to brief them.
Our important information explains what our work is and isn't.