6 Steps in the Financial Planning Process

Chances are you’ve heard the old adage, “If you fail to plan you plan to fail”. Yet, there are those who continue to neglect the call to plan with financial planning being the most overlooked. If financial planning is a topic you find difficult to address, the six steps outlined below will help to provide clarity in the planning process.

 1) Acknowledge a Plan is Necessary

Imagine planning to drive from California to New York. What components will you need to consider to make sure your trip goes as smoothly as possible? Pit stops, sites to see, fuel costs, people to visit…there would be a myriad of things on the travel list. The same consideration should be applied to your financial life. Failing to plan before traveling can leave you open to unforeseen disaster, and so can failing to plan when it come to your finances. 

2) Understand the Plan

Planning is about your whole life! That’s right! This isn’t only about the future, but has much to do with yesterday as that shows you what you want to do differently today. It’s about today, because this is where you begin to take action toward tomorrow’s change. And it’s certainly about tomorrow, since that’s where you intend to see the reward of your work. Financial planning is not reduced to one topic. Many people think financial planning is only about retirement. Retirement is just a piece of the cake. Financial planning is about you and your individual life. Your plan may include retirement funding, debt management, large purchase planning, business funding, business succession or sale, tax planning, risk analysis, legacy planning, philanthropic inclinations and considerably more based on your evolving needs and goals.

3) Seek Proper Advice

Help is a good thing! It’s been hinted in the previous steps so here’s a direct statement. Get Help. Seriously, don’t let embarrassment or pride even, hinder you from being responsible with your pockets. There is nothing to be embarrassed about, we all need help with something at some point, especially financial planning. Don’t want to pay? It could be difficult to pay for something you’ve never paid for but if you’re on this step it’s clear you know it’s necessary and worth it. You can do it on your own? Maybe you can, maybe you can not, but you don’t have to leave it to chance.

4) AAANND Action

Once you’ve recognized that you need a financial plan and why you, YOU ACTUALLY NEED A PLAN. Don’t be the person who wants better health, joins a gym and never go. There is no win in the idea, but success in the action. This just may be the most important step (actually they’re all equally important just keep reading) in the process. 

5) Be Transparent

Honesty is a must. You should be honest with yourself and the planner of your choosing. A rule of thumb is to talk, talk and talk more. Be totally open and forthcoming with your situation, needs and goals. Too many times people “forget” about that loan or this inheritance. Your plan is based on your information so missing information means your plan will be incomplete. 

6) Stick to the Plan

This is another important piece, adhering to the plan! Your plan is on paper (in this case screen) but when you begin to actively follow your plan, it becomes more than your plan...it becomes your reality. Though nothing in life is guaranteed, having a plan in place will certainly help you to be better equipped to handle the unforeseen financial woes that hits us all. Without it, you may not get from A to Z. If you do you’re likely to make a stop at D, stumble at G, or trip on a hurdle at R and use more time and resources to recover than necessary. You will much more efficiently go from A (the beginning) to Z (your goals) because you have a planned route to follow. Know that you need a financial plan, understand your plan, take action, be honest with yourself and your planner, and commit to your plan. Invest in your success.