6 Steps To Starting Your Financial Plan
During this time of economic downturn and financial struggle, most families are desperately trying to figure out how to make more money or how to keep more of their money.
Financial planning is a process that requires discipline and for many a financial planner offers the advice and guidance one needs to stay on budget. The first step toward planning your financial future is usually the hardest, but regardless of when you begin, the basics remain the same.
Here are the six most important steps to get started with your financial planning:
1. Assess your situation. This is the most critical step in financial planning, it summarizes where you are in regards to the cumulative effects of your past financial decisions.
- Net Worth
- Cash Flow
- Insurance Policies
- Tax Returns
- Investment Portfolios
- Retirement Plans
- Employee Benefits
2. Identify your goals. Your goals should be specific and measurable. Married couples should complete this step together as personal values, attitudes, and extended family responsibilities may come into play. You'd be surprised to find that your spouse may have different financial goals than you do. Some of these may include but are not limited to: education for your children, supporting elderly parents, etc.
3. Find a Certified Financial Planner. Different planners have different areas of expertise. The best time to determine what you need in a financial planner is after you assess your present situation. This will help you narrow your choices. One of the best ways to find a provider is to ask your network of friends, family, and coworkers that you trust for a referral.
4. Design a plan. After review of your current situation the financial planner will provide recommendations and solutions. These recommendations should be structured to meet your financial needs and may include a budget, a savings plan, a retirement plan, and investments.
5. Execute the plan. A financial plan is only successful if put into action. Your financial planner should help and coordinate your efforts to reach your goals and objectives. By guiding you through the process, especially with challenging tasks such as investments, your financial provider can help you execute with other qualified professionals.
6. Review, refine, and review. Once executed, a financial plan must be reviewed regularly. As your needs change and the economy changes, so will your plan. A good financial planner should encourage you to review your plan and make changes as needed and check on your progress.