Six Step Financial Planning Process

Personal Financial Planning, is your personal “road map” to help you establish

• Where you are today

• Where you want to be

• How are you going to get their

1. Current Situation:

The Financial Planning process starts by putting a stake in the ground. The first step in the process is to establish where you are today. To do this we need to take a look at your current situation, income and expenses – all the money you have to pay for your lifestyle, debt and future plans. It is these basic money management strategies that are the foundation of your future success.

Your net worth, all your assets less all the loans you have to find the net worth figure. Over the years you can see how well you are doing if your net worth is moving up each year.

2. Future Goals:

In this part of financial planning you need to look at what are your immediate goals and what are your future goals. You can build the lifestyle you want for the future by breaking the end result into small steps. Each goal will need a monetary figure. Each goal also needs a timeframe when you want to achieve the result. Then a step by step plan can show you what to do to achieve your goals. How you structure your finances can help you achieve your goals. Having specific accounts for different goals and functions keeps your money in the right place for the right job. Click here to see how your goals can create Financial Freedom

3. Risk:

During our lifes’ journey we have risks that can set us back. Losing a job, sickness or a relationship breakdown can all affect our finances. Tools can be put in place to help you through difficult periods. A cash buffer or emergency account often allows peace of mind on a day-to-day basis. For larger one off events Insurance can often help us through financially at the time of the event. The impact of the event needs to be weighed against the cost of a risk programme.

4. Investing:

Building wealth for the future is about putting small amounts aside that can grow either by compounding interest or through the selection of different asset classes. Paying yourself first, and then spending what is left will give you a regular amount to invest. ( Rather than having everything in your spending account and hoping to save some money at the end).

5. Retirement

Is retirement a scary thought for you ? I like to think of retirement as a lifestyle choice when you can support your lifestyle from passive income. That is income that you don’t have to go out and earn on an hourly basis. We all have different expectations of our lifestyles when we are retired. Being able to do what you want, when you want to, and where you want to go is the freedom I have aspired to create. Click here to read Retire Rich

6. Review

Like any planning function, financial planning needs to be adjusted each year as you achieve the steps you have set your self. This ensures the plan is up to date and fits your current circumstances

Where to form here? This is an overview of the Financial Planning Process. Educating your self and being informed about each area of the process will assist you in your learning and to make changes to your current financial situation. Follow the links to cover more in depth discussions for each section. Financial Planning