Who is financial planning intended for? If you’re performing the week-to-week salary shuffle like so many (too many) others, the concept of financial planning may seem not only alien but also absurd.
Similarly, if you are financially secure and all of your financial requirements and desires are simply (maybe even effortlessly) satisfied, financial planning may not seem like a good fit for you.
This is important to keep in mind: Financial planning is a process that is unique for each person. There is no “one size fits all” solution. That being said, successful financial planning should, at its heart, give you a solid grasp of your present personal financial circumstances, clearly identify your financial goals, and assist you in protecting yourself and your loved ones from catastrophic loss.
Questions You Need To Ask Yourself
Perhaps we could approach financial planning in the same way we approach lifestyle planning; after all, life coaching and vision boards are popular topics that haven’t waned over the years. Any competent life coach will ask you what you want out of life, what your objectives are, and challenge your value system at some time. Why shouldn’t you ask the same questions about your finances?
Regardless of the size of your fortune or its colossal proportions, how do you want your money to work for you?
How do you want your spending and investments to reflect your personality? What do your purchasing habits and assets reveal about your value systems and the legacy you intend to leave for your family and the world in which you live?
4-step Financial Planning Method
Following a simple 4-step Financial Planning method, you can start to build a picture of your unique financial situation.
- Look around. The first step is to determine how much money you have on hand. Take a “snapshot” of your financial situation by gathering all of the paperwork, account statements, insurance policies, and other items that influence your financial situation.
- Clearly define your financial objectives. Be as explicit as possible in this section, with actual money numbers related to a time frame. The more clearly stated your objectives, the more equipped you will be to make decisions that will offer you the best opportunity of achieving them.
- Make and carry out a plan of action. Now that you have a strong grasp of your present financial condition and a well-defined set of financial goals, it’s time to chart a path of action and put your plans into action.
Monitor and fine-tune. Things shift. There may be happenings in your personal life or the market that prompt you to reconsider your financial future. Financial planning is a long-term process, not a one-time event. Staying aware and adaptable will be critical to your long-term success.