How to Use the VeriPlan Comprehensive Financial Planner
Developing a Family Financial Plan with VeriPlan
VeriPlan is personally customizable financial planning software that helps you develop your own comprehensive lifetime financial and investment plan for your family. Functioning as financial decision support software, it automates millions of integrated projection calculations behind the scenes. With VeriPlan you can improve your financial decision-making, because you are better informed about the implications of your decisions. VeriPlan demonstrates the value of improved financial practices within your particular situation and can save you many thousands of dollars.
VeriPlan automatically develops fully integrated projections of your lifetime income, expenses, debts, taxes, and assets. It gives you direct control over all the data and assumptions that underlie your lifetime financial plan. After any change that you make, VeriPlan will instantly project a revised lifetime cash flow and asset growth scenario for you.
For “financial planning,” every year millions of people do the following. They find a simplistic, free retirement planning calculator on a website. They plug in a few numbers and press the magic button. The free calculator shines a green or red light or spits out a “save this much more” number. Even worse, they get instant buy-me-now recommendations for expensive financial products that just happen to be promoted by the website.
The average person works about 2,000 hours per year for about 35 years (70,000 hours). Given just how very difficult it is to earn a good living and to develop financial security, it makes sense to spend more effort on your financial planning. You cannot do informed financial planning without sophisticated retirement planning software. Unless you can afford an expensive financial advisor with access to professional grade financial planning software, you cannot begin to do your own planning without VeriPlan. It is the most sophisticated do-it-yourself financial planning software available to home users.
You dedicate the necessary time and effort to model your financial situation in VeriPlan. It will handle all the calculation grunt work for you. With VeriPlan, you can make better informed choices about your financial alternatives for the future. In general, the following steps are how you develop and update a financial plan with VeriPlan.
1) Think about your lifetime financial goals and what you want to achieve financially
Developing a lifetime financial and retirement plan is much more than just putting numbers into a financial planning software tool. Comprehensive lifetime financial planning is an iterative process wherein you:
A) establish financial goals and objectives,
B) make assumptions about the future,
C) model your lifetime finances in software, and
D) evaluate your opportunities and constraints.
As you study your opportunities and limitations in light of your personalized financial projections, you will refine your goals and financial plan. With a better understanding of potential opportunities and constraints provided by your customized VeriPlan financial projection models, you will decide what you intend to change or not to change in your real-life regarding your financial behaviors going forward.
Your initial usage of VeriPlan will be thought provoking and the most labor intensive. You will consider your objectives, load and refine your data, and test alternative assumptions. During this process, you will move iteratively toward the development of the “baseline financial plan” that you intend to implement. VeriPlan aids you in this planning process by allowing you to model your alternatives very quickly and make better informed decisions.
Once you have established your baseline lifetime financial plan, you challenge will be to implement those decisions in real life. After some period of time (e.g. months or a year), you could then update your information in VeriPlan to see whether you are on track toward achieving your financial plan. All data and parameters in VeriPlan are user-changeable, so you can continue to use it without requiring software updates, upgrades or maintenance contracts.
2) Read VeriPlan’s embedded documentation and learn how to use its functionality
Read and understand this “How to Use VeriPlan” guide. Open VeriPlan within Microsoft Excel and read the informational worksheets toward the left. These worksheets provide an orientation to VeriPlan’s functionality, layout, and design philosophy. Also, note that spreadsheets within VeriPlan are arranged into groups. The left-most worksheet tab of each group is named with capital letters and provides an overview of each of the worksheets within that grouping.
VeriPlan’s embedded user documentation will help you to understand how VeriPlan works and what it allows you to do. All VeriPlan operational documentation is placed within VeriPlan where you need it, explaining what to do and why. VeriPlan’s additional user guide includes extensive information on “best practices” in personal financial planning and investment management. In addition, VeriPlan provides hyperlinks to external financial information for further reading.
3) Navigating within VeriPlan
VeriPlan groups worksheets with similar functionality. These worksheet tabs are arrayed along the bottom of your computer screen from left to right. Worksheet groups have descriptive names on their tabs and are numbered within groups.
Since VeriPlan has numerous user-accessible worksheets, and not all tabs are visible on the screen at once. To scroll the tabs, notice two small arrowheads pointing to the left and two small arrowheads pointing to the right. Use these arrows to scroll among the worksheet tabs. The leftmost or rightmost of these small arrowheads, you will be taken to the first and last of the spreadsheets. Clicking repeatedly on the two inner arrowheads or holding down an arrow with your pointer will allow you to scroll spreadsheet tabs one at a time. When you find the tab that you want, click on it to open the worksheet.
VeriPlan’s 34 user-accessible worksheets are grouped as follows from left to right:
* 2 Information worksheets
* 10 User Profile and tools input worksheets
* 1 central reference and links worksheet summarizing your data entries and settings
* 20 output graphics
* 1 consolidated data table for all output graphics
To navigate within any worksheet, use the vertical scroll bar on the right edge of your screen and the horizontal scroll bar in the lower corner of your screen, adjacent to the worksheet tabs. Only some of VeriPlan’s worksheets require use of the horizontal scroll bar, and this is dependent upon you screen size and choice of screen resolution. When you review VeriPlan’s output graphics worksheets, scroll bars are unnecessary and will not be displayed. On many worksheets, you will find bold and underlined blue hyperlinks. The labels of these hyperlinks tell you where they will take you. These hyperlinks allow you to jump within a spreadsheet, between spreadsheets, or to external sources on the Internet.
4) Load your financial data and choose your initial VeriPlan tool settings
All user-changeable financial data inputs and parameter settings are found on “User Profile” and “Tools” worksheets. These input worksheets all provide detailed instructions that will not be repeated here. Instead, this guide will summarize the general approach to loading your personal financial information into each worksheet and setting the parameters. While the data entry can take time, most users find that most setup time involves finding financial records. Few people already have well-organized financial information. Therefore, for many people, VeriPlan will provide the first consolidated picture of their financial affairs that they have ever had.
All input worksheets are divided into sections and at the top of each input worksheet there is a “What To Do” listing of sections within that worksheet. This listing includes hyperlinks that allow you to jump down directly to each section. Each of the listed workbook sections will categorized as one of these three types:
* Required: (a specific instruction will be provided for each required section)
* Optional: (a specific instruction will be provided for each optional section)
* Informational: (No required or optional action — informational only)
To make your financial data entries within workbook sections, select the data entry cell directly by using your cursor or by tabbing between cells. Then, either type your information directly into that cell or into the Excel “Formula Bar” near the top of the screen. All standalone data entry cells or data entry cells in tables are outlined with a bold black line around them. All other cells are locked and are not user selectable. Some standalone cells and cells in tables may be outlined with solid or dashed lines, but are for information. If you cannot select a cell, it is informational and not user-changeable.
Once selected, every data entry cell has a “Movable Data Entry Guidance Box” that will appear to provide instructions. Select and move these boxes with your cursor. All data entry cells have error checking to prevent entering inappropriate data. If you enter inappropriate data, an error box will pop up with instructions on how to revise your input.
You should NOT use cut-and-paste operations from one data entry cell to another. In some circumstances, cut-and-paste actions can overwrite cell error checking and logic. This would disrupt your worksheet and require you to fall back to your most recently saved version of your plan. Follow the instructions on the ReadMe worksheet concerning saving VeriPlan files with unique names, so that you do not keep overwriting the same file (e.g. MyFinPlan_05-22-2014-A, -B, -C, etc.).
5) Compare different projection scenarios to refine your baseline financial plan
In general, to determine whether personal financial “Strategy A” or “Strategy B” is likely to be better for you in your particular circumstances, you will compare two VeriPlan projection scenarios to see which yields a better long-term financial result. After you have loaded your financial data and made you initial parameter settings, you have automatically created a draft baseline financial plan. However, this draft plan is unlikely to be your optimal lifetime financial plan.
There are no restrictions within VeriPlan on the number of different VeriPlan models that you can run simultaneously on your PC or Mac. In practice, however, typically a VeriPlan user will have only one or two versions of their plan open simultaneously. The maximum number would be limited by the amount of system memory (RAM) that you have and the speed of your processor. Yet, even with a ten-year-old Windows XP PC with only one-quarter megabyte of RAM and a slow processor, you can run numerous copies of VeriPlan simultaneously and achieve rapid performance.
To refine and optimize your financial plan in VeriPlan use this approach (This example compares investment costs):
A) Complete your data entry and parameter settings for your initial plan and save it with a unique file name, such as “MyFinPlan_04-17-2014-A”
B) Resave your plan with a different file name, such as “MyFinPlan_04-17-2014-A_Lower-Investment-Costs”
C) Open both “MyFinPlan_04-17-2014-A” and “MyFinPlan_04-17-2014-A_Lower-Investment-Costs” and have these two VeriPlan models running simultaneously on your PC
D) Go to Section 4 of VeriPlan’s costs worksheet within the “MyFinPlan_04-17-2014-A_Lower-Investment-Costs” version and change the “0” to a “1” to use the user-changeable “reasonable investment cost” assumptions in VeriPlan.
(Note: Even “average” investment costs are horrendous and unjustified. Cut them to the bone and save thousands yearly. The financial industry feeds on your assets – leading to worse, not better NET returns. NET returns are all that counts, because those assets would be available to support your family.)
Now, you have two alternative lifetime financial plans that differ in one respect, that is, the level of investment costs that you plan to pay over your lifetime. In this comparison, the first version of VeriPlan automatically projects your lifetime investment costs in proportion to those of your current investment portfolio. The second version uses alternative investment cost assumptions. Now, the question is simply to compare one scenario with the other. If one strategy is more appealing that the other, then this strategy becomes part of your baseline family financial plan. Use that version of VeriPlan going forward, as you test additional strategy projections and chose between them.
Compare one VeriPlan projection scenario with another by using VeriPlan’s standard output graphics and corresponding data table worksheets. They enable you to make easy visual and numerical comparisons between your projections:
A) Use the two alternative projection scenarios that you have open in your PC
B) Choose which of the output graphics (and corresponding data tables) you wish to use in your comparison (In most cases, you would use one of the total assets graphics, because they project your cumulative long-term financial assets, which are the net result of all prior income, expense, debt, tax, and investment asset growth factors over the intervening projection years.)
C) Collect data from a graphic or from the green-tabbed data worksheet that corresponds to that graphic.
D) Choose one or more future ages as your comparison benchmark age(s). (You can do this comparison live by switching between these projections. Alternatively, you write down data to compare the projections. Since all VeriPlan graphics and data worksheets are pre-formatted for printing, you could also compare printouts.)
In general, the projection with the highest projected dollar amount at some future age(s) would be the preferred strategy. However, you need to judge the magnitude of the projected financial advantage to decide whether the advantage warrants the effort in real-life required to achieve that advantage.
6) Update your baseline financial plan and evaluate new decisions in the future
To refine your baseline financial plan, you simply keep making comparisons between alternative strategies and projections, until you have a refined lifetime financial plan that reflects your family’s financial needs, desires, constraints, and intentions. Then, the real challenge becomes how to alter your real-life financial practices related to income, expenses, debts, taxes, and investing to conform to your financial planning intentions.
Since VeriPlan allows you to change all financial data and all settings and parameters, it has no built-in obsolescence. After the passing of some months or a year, you could update your model with then-current data to check your progress. As new financial decisions arise in the future, you can update your model and evaluate those future financial decisions.
VeriPlan is a comprehensive, automated, and fully integrated lifetime cash flow and asset valuation tool that you can customize in detail to your particular financial situation. Therefore, it can help you to evaluate a very long list of financial strategies. When you compare strategies using different VeriPlan projection scenarios, it is important that you think clearly about the positive and negative financial characteristics of each financial strategy. As you would normally do, list those characteristics on a piece of paper and estimate any associated costs and returns. Then, plug those numbers into an alternative VeriPlan projection scenario and compare the projection results with your current baseline financial plan.
This “how to” guide will not attempt to list all of what VeriPlan could enable you to compare. For more information, on the range of what VeriPlan can do, refer to the VeriPlan User Guide manual. Go to the Home Page of this website to download the free VeriPlan User Guide. Look in the left-hand sidebar of the home page and scroll down.
For a few examples of how to model alternatives within VeriPlan, see these sections of the free VeriPlan User Guide:
A) Home Purchase Tool – An example of how to use this Home Purchase Tool
B) Expense & Savings Tool – The Children’s Education Expenditure Planning Tool
C) Expense & Savings Tool – The Mid-Career Education Planning Tool
D) Tax-Advantaged Plan Tool – Evaluating alternative tax-advantaged investment strategies
Also, refer to the articles in the blue horizontal menu bar at the top of this page.
7) VeriPlan and Microsoft Excel set-up tips
VeriPlan set-up tips:
A) VeriPlan requires Microsoft Excel 2002 (or on ANY more recent version of Excel) running on Windows or Macintosh. VeriPlan is tested on a wide range of Excel versions on Windows and Mac OS.
B) Copy the files from the VeriPlan download package into a directory on your hard drive using your Windows or Mac file system.
C) Before using VeriPlan every time, shut down all other Microsoft Excel spreadsheets and close down Excel.
- Microsoft Excel has global settings that are determined either: A) by its default settings or B) by the first spreadsheet that is opened within Excel. Other spreadsheets opened thereafter during an Excel session will inherit these global settings.
- VeriPlan comes with particular global settings, which differ from the Excel defaults and from many other spreadsheets.
- If you shut down Excel first and then open VeriPlan by clicking DIRECTLY on the VeriPlan file name within your file system, then Excel and VeriPlan will open automatically, and Excel will not inherit inappropriate global settings.
D) The first time you use VeriPlan, open the original, master VeriPlan file by clicking DIRECTLY on its original file name within your file system. Then, before doing anything else, resave your working VeriPlan model to your hard drive with a different life name.
- When saving your VeriPlan files that contain your various personal lifetime financial models, use some file naming convention, such as MyFinPlan_05-22-2014-A, -B, -C, etc. that works for you. b.Back up your work frequently and do not keep writing over the same file with the same filename.
- To end a planning session, just save your VeriPlan file and shut down Excel. To restart the next time, reopen VeriPlan by clicking your most recently saved VeriPlan file name within your file system. (After ensuring that Excel is already shut.)
- You can run more than one VeriPlan model simultaneously using different descriptive file names.
E) VeriPlan is performance optimized for sub-second revisions to your model. It has a very large (~50Mb) file size which can take time to open and save on your PC. Newer, faster machines open and save VeriPlan faster, and run more simultaneous VeriPlan models.
Optional Excel set-up tips:
To adjust Excel’s Options, find its “Options” panel, which Microsoft keeps moving around from version to version. For Windows Excel 2002, look for Options in the Tools menu. In Windows Excel 2007, look in the left-hand part of the ribbon near the bottom. For Windows Excel 2010, find Options on the File menu. For Excel on the Mac, see Properties on the Excel menu. For other Excel versions, look around – it is there somewhere.
- To adjust cursor movement go to “Edit” – “Move cursor after Enter Direction”: Left or right movement prevents the cursor from jumping up or down the page to the next data entry box. Your taste, but horizontal cursor movement is better.
- To adjust auto-save frequency on “Save” – Check “Save AutoRecovery” box and choose the minutes. With Autosave, Excel consecutively saves each open VeriPlan file. If this is irritating with many VeriPlan files open, increase the minutes.