Financial planning is a process. The purpose is to achieve your personal and financial objectives. The result is peace of mind.
Take the process step-by-step.
Each step requires time and knowledge. It is vital to take each step sequentially. Here is an overview of each step in personal financial planning.
Step One: Engage in the process.
Determine if you will do it yourself or engage the services of a professional to guide you through the financial planning process.
Step Two: Gather data.
Collect your important financial documents. Gather qualitative data from your personal perspective. Gather quantitative data from reliable sources.
Step Three: Prepare financial statements.
Make a list of income. Make a list of expenses. Calculate net cash flow. Make a list of assets. Make a list of liabilities. Calculate net worth. Make notes.
Step Four: Set goals.
Write a prioritized list of specific, measurable, action-oriented, reasonable, and time-bound statements of the financial objectives you want to achieve in the future.
Step Five: Develop a personal financial plan.
Arrange to achieve your goals while managing your cash flow, net worth, income taxes, insurance, investments, retirement, and estate.
Step Six: Implement your plan.
Make a one-to two page checklist of the projects to complete. Communicate with people involved in the process. Do the next task.
Step Seven: Monitor progress.
Re-view, make re-visions, and re-engage in the process.
What questions or comments do you have?
Have you engaged in the process?
Chris Bryant is an American financial advisor.