The Ultimate Financial Planning Guide: Do It Like the Pros in 6 Steps
The Ultimate Financial Planning Guide: Do It Like the Pros in 6 Steps
A financial plan goes beyond budgeting for regular expenses. It’s the process of managing short- and long-term finances. Taking good financial planning steps now can mean the difference between achieving your financial goals and living paycheck to paycheck.
Certified Financial Planners follow a set of steps to create recommendations for their clients. With some modifications, you can use the same process to develop your own financial plan.
What Are the 6 Steps in the Financial Planning Process?
Here are the six steps in the financial planning process, according to the Certified Financial Planner Board of Standards:
You may see variations with lists of five or seven steps, but the underlying principles are the same. Any of these lists of financial planning steps can be a model for your own personal financial plan.
Step 1: Set Your Financial Goals
The financial planning process starts when the planner establishes a relationship with you to learn about your goals, lifestyle and values. It’s worth the time to explore these ideas on your own.
When you’re working toward a specific goal, you’re more likely to stick to habits that will get you there. Take some time to think about the financial goals you want to reach. Here are some to consider.
Financial Goals To Consider
Buy a house.
Pay for your children’s college education.
Go on a dream vacation.
Fund your retirement.
Start a business.
Get out of debt.
You can — and should — have short and long-term goals. If something is important to you, write it down
Step 2: Put a Price Tag on Your Goals
In the first step, you identified the goals you want to achieve in the future. Next, figure out how much you’ll need to save to accomplish your goals.
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