The Detailed Steps to Financial Planning

Author: Paul Easton
Financial planning is a step-by-step guide to your financial goals. It should be a set of planning decisions that effectively meets your needs and goals in life. It is always based on your appetite for risks, your preferences, and your choices when it comes to your journey to your financial goals.

Understanding your own needs and limitations is very vital indeed. The financial plan is just a way for you to implement your course of action to better your chances of reaching your financial destination. Let us break it down into the fine details.

You have to set first the goals with your financial planner. This first step is meant to distinguish where you want to go in terms of your finances and life in general.
After that, the second step, which is related to the first one, is for the financial planner to gather relevant information on you through an interview or questionnaire. This would include the qualitative and quantitative aspects of your financial and relevant non-financial situations that your financial planner will analyze.

This leads to the analysis of your information. The information gathered is analyzed so that your situation is fully understood by your financial planner for proper recommendation. This includes a part where the planner determines whether you have sufficient resources to reach your goals. This part is studied further with identifying what these resources are.

The fourth step is the construction proper of a written financial plan. Based on the understanding of your planner with what you truly want in the future and considering your current financial status, a detailed roadmap to your financial goals is drawn to assist the implementation to achieve these goals.

After creating a written plan, it is time to implement your plans. Putting the plan into practice, you will be acquainted of strategies in the plan to hurdle difficulties that might come along the way. Guided by the written financial plan, the strategies outlined in the plan will fully use the resources allocated for the purposes intended.

After the implementation, this last step is crucial. This step is the monitoring of your implementation of the financial plan. With monitoring is the review of the efficacy of the plan. The implementation process must be closely monitored to make sure you keep on track with the plan and to provide motivation along the process. It also checks your progress if it stays in alignment to the goals created in the beginning.

Periodic reviews are crucial because it will check misalignments and changes in your situation. With any significant change in your financial life, the strategies and goals in the financial plan can be modified accordingly.

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