Who is financial planning aimed at? If you’re like so many (too many) people, the notion of financial planning may seem not just exotic but also ludicrous.
Similarly, if you are financially comfortable and all of your financial needs and aspirations are easily (if not effortlessly) met, financial planning may not seem like a good match for you.
It is critical to remember that financial planning is a process that is unique to each individual. There is no such thing as a “one-size-fits-all” solution. That being said, comprehensive financial planning should, at its core, provide you with a solid understanding of your current personal financial situation, clearly outline your financial goals, and assist you in safeguarding yourself and your loved ones.
Questions You Should Ask Yourself
Perhaps we could approach financial planning in the same way we do lifestyle planning; after all, life coaching and vision boards are popular topics that haven’t faded with time. Any effective life coach will ask you what you want out of life, what your goals are, and will at some point challenge your value system. Why not ask yourself the same questions regarding your finances?
Regardless of the amount or scope of your fortune, how do you want your money to work for you?
What do you want your spending and investments to say about you? What do your purchases and assets indicate about your value systems and the legacy you want to leave for your family and the world?
Financial Planning Method in Four Steps
You may begin to develop a picture of your individual financial status by following a basic 4-step Financial Planning process.
- Take a look around. The first step is to figure out how much cash you have on hand. Gather all of the papers, account statements, insurance policies, and other items that impact your financial condition to create a “snapshot” of your situation.
- Define your financial goals clearly. In this part, be as specific as possible, including actual money figures and a time range. The more clearly defined your goals, the more equipped you will be to make judgments that will give you the highest chance of success.
- Create and carry out a strategy. Now that you have a firm grip on your current financial situation and a well-defined set of financial objectives, it’s time to create a course of action and put your plans into action.
- Maintain and fine-tune. Things change. Events in your personal life or the market may cause you to reevaluate your financial future. Financial planning is a process that takes time and is not a one-time occurrence. Maintaining your awareness and adaptability will be crucial to your long-term success.