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5 Steps of Financial Planning Process

Financial Planning process starts from understanding & examining your current situation, gathering relevant financial information, setting up financial goals (short term & long term) and finalizing a plan in detail. This will cover how to meet the financial goals in the current situation and future plans.

Step by Step approach – Financial Planning Process

Set specific and quantifiable goals You should have a specific targets of what you want to achieve and when you want to achieve it. Have measurable goals as it will be simple for you to understand whether you achieved your goals or not.

Analyze and understand every financial decision Every decisions are interrelated and one has impact on other financial decisions. A comprehensive plan is required otherwise it will be difficult to reach financial goals.

Re-evaluate your financial situation periodically Apart from planning, you need to monitor and check your financial position regularly. Owing to change in income levels/expenses/circumstances, such as a marriage, kids, house purchase or increase in income. As Financial Planning is dynamic in nature, changes are required in your planning periodically, so that you are on track with your long-term goals.

Start your financial planning early The early you start your planning, the better it is for you. Developing well Financial Planning habits at an early age such as saving, budgeting, investing will prepare you to meet life changes and handle any kind of situation/emergencies.

Be ready for the unexpected – Know all risk Inflation, stock market movements, interest rates all effects your financial goals and these are beyond your control. So be prepared for this kind of unexpected situations.

What You Need to Know About Financial Planning

Financial planning has been evolving through the years. The save today and spend tomorrow mantra no longer satisfy all investors recently. New comprehensive approach in financial planning dictates to let the modern investor enjoy and save at the same time. The newer generation is more open to risky investments when they are younger because they know they still have the time to recover. The conservative part of investors largely belongs to the older investors. Now, a good financial planning consultant must have a good clientele of the two distinct investors to be able to be a credible finance adviser to you.

A comprehensive financial planning includes many aspects of your financial life, namely:

1. Insurance and Risk Management

2. General Financial and Retirement Planning

3. Estate Planning and Management

4. Investment Planning

5. Accounting & Tax Planning

6. Employee Benefits & Retirement Plans

7. Other related financial service that your financial portfolio might demand

The protection and improvement of your investments are the main concern of a financial planning consultant. When your financial planning consultant has reviewed your financial information, where it is at the moment and where you hope it will be in the future, they will advise you to make smart decisions regarding your money. This strategic advice will be mostly about how to make the most out of the money you have, good investing, how to protect it and how to pick the financial products that suit your needs.

Sometimes a FPC will have investors that present their business for consultations. They will consider the seven key building blocks required to operate a successful business and will mix and match them to suit your needs specifically. They gather information from that will then be used to build a financial plan. The data on this plan should reflect your current financial position, list your goals, explain in details how you will reach them, show possible investments, analyze any risks, dictates costs and reveal any money coming in from chosen investments. This can make your business run more efficiently as the losses and income are well described for basis of investments.

Having a financial planning consultant assures that you are being given quality advice from someone who is a professional in the field and who knows what they are talking about by experience. If you did a financial plan by yourself, you may be worried that you’re making mistakes, taking too long to do it, or ended up not being sure if your resources might have been correct. Hiring a certified FPC shows that you are confident that they know what they are should be doing and can assist you get the most out of your money by presenting better and sure options. Working with them also leaves you free to concentrate on other aspects of your company that you need to work on as well like management and advertising.

Many businesses and individuals are now realizing that having a good financial planning consultant is truly important member of a financial system.

Basics of Financial Planning – 5 Simple Steps to Success!

I have been asked by many people over the past few years this question, “What do I need to do first in order to get my personal finances together?”

When people first started asking me this question, I have to be honest I wasn’t sure what to tell them.

Now that some time has passed though, I feel as though the ANSWER to this question is quite simple.

What I mean to say is that the ANSWER is simple, but what trips people up isn’t the ANSWER but the

So what I am going to do for you today is answer the question: “What do I need to do first in order to get my personal finances together?” by supplying you with some basic ACTION steps to get you started in the right direction.

STEP 1 – Determine Your Values.

This step may seem a little out of place for financial planning. Most people ask me, “What do my values have to do with my finances?”

I say to them, “Stop for a minute and think about it, is there anything more important than your values?”

All your decisions are based on your own personal set of values. Where you live, what you drive, how much and where you spend your money, what you focus your time and energy on – are all affected by your values.

This is why once I understood Step 1; I could tell people with one hundred percent certainty that once you have a clear picture of what you value most in your life – you’ll be better able to figure out how to create your personal financial plan.

At this point you need to take an action step: I want you to take about 30 minutes and write down what your top 5 values are. Remember, we are talking about values not goals.

Values are security, happiness and freedom. Goals are pay off mortgage, be debt free, etc… Once you have figured out your top 5 goals you are well on your way to personal financial success.

STEP 2 – Determine Your Goals.

Now that you know what you value in life, it is time to base your goals on these values.
What I mean by that is if you chose, Security as one of your values, then one of your financial goals could be to start putting aside 10 % of your income for an emergency account.

Another example would be if you chose Excitement as one of your value, then one of your financial goals would be to start putting aside $50 a week aside to take your family on a monthly trip.

Whatever you want to do that is in line with your values needs to be considered.

To get you started, I would take your five Values and chose 3-5 quantifiable, goals that you would like to accomplish for each value.

STEP 3 – Get Organized

Now that you have a better understanding of yourself and what you want based on your values you can begin to focus on your financial situation.

The reason, Step 3 – Get Organized is after determine your values and goals is because, this is the hardest part of the whole process.

Being that this is the hardest part of the process, you can now look back at your values and goals and have some motivation to keep you on track.

Getting organized sounds harder that it is, especially when it comes to personal finances.

The best way to get a handle on your total financial situation is create a system for filing and keeping all your personal financial documents so you know where they are and can reference them fairly easy if needed.

I recommend using a hanging file folder system. All you need is a hanging file folder box/crate, about 15 hanging file folder, and about 100 manila folders.

The most important items that you will need to track are: Taxes (7 years back), Retirement Accounts, Social Security, Investment Accounts, Savings and Checking Accounts, Household accounts, Credit Card Debts, Other Liabilities (debts other than credit cards and mortgage), Insurance. These 9 accounts are the most important and will help you have a better understanding of your total financial picture.

So your action step at this time is to create a filing system so that you can store, access and understand your personal financial documents. Don’t skip this step, it is the most important of the five.

STEP 4 – Determine Your Plan/Budget – Retirement, Savings, Investments, and Tithing

Once you have a better picture of your current financial situation. It is time to be honest with yourself and decide whether you think you are on the right track or you need to overhaul your financial plan.

Most people at this point have decided that they need a complete overhaul. Again, don’t get discouraged, because this isn’t as hard as most people make it out to be.

Determining your Plan/Budget is really just decided what your priorities are and where you money needs to go!

The hard part about this is making sure you are paying the most important people first. I make my priorities Self, Bills, Cost of Living, Fun/Excitement.

When I say Self – I mean “Paying myself first!” Taking a percentage of my hard earned dollars out of my paycheck and dividing in up between saving, investing, and tithing. I pay myself first because I am the most important in my life.

When I say Bills – I mean fixed expenses that you pay month to month. Mortgage payment, gas, water, power, etc…. Things that very rarely change month to month.

When I say Cost of Living – I mean variable expenses that fluctuate month to month. Groceries, dining out, vehicle gas, etc… Things that change month to month.

When I say Fun/Excitement – I mean expenses for things that I want to buy like, golf clubs, cars, guns, etc. Stuff that you want.

Over time you can create a budget yourself or tell a CPA exactly what you want and they can develop a budgeting system that you can use to keep track of what you spend and then you can adjust it yearly as needed.

STEP 5 – Implement Your Plan

Now that you have taken the time to figure out what your values and goals are. You have developed a system for tracking all of your financial information and created a budget based on your values and goals, you have to take action steps to achieving them. This will seem like the hardest part of the whole process but just remember that all things that are worth doing and getting better at take time.

Make a commitment to yourself to take small actions daily to move closer to your ideal financial situation. This process may take up to 12 months.

The question you need to ask yourself though is, would you rather be in the same situation financially in 12 months or would you like to be 5 steps ahead.

It’s up to you to make that decision. I hope this has been helpful and look forward to your comments.