4-Steps of Financial Planning

By: Ted Black, CFP©
Summer 2018 (Vol. 36, No. 2)

A place to start and come back to!

Given the number of inquiries we’ve been receiving regarding the topic of Financial Planning recently, I thought I’d revisit an article we ran several years ago that outlined our approach to the process. Please keep in mind that Financial Planning is a personal journey and can mean different things to different people and different financial advisors, and as such, there is no “one-size-fits-all” approach. With that said, at its core, worthwhile Financial Planning should provide you with a solid understanding of your current personal financial situation, clearly define your financial goals, and help you protect yourself and your loved ones from catastrophic loss.

Whether you are just starting out in your professional life, in your prime earning years, or in retirement, a personalized game plan can create a solid foundation from which you can make informed decisions about your financial future and help you make the best use of your assets. The following is just a small sample of questions you might ask yourself as you’re preparing a Financial Plan: what is my monthly income and outflow?; what’s the value of my current investment holdings?; how much and how often am I contributing money to my investments?; when do I want to retire?; how much income will I need during retirement?; do I need life insurance, disability insurance, and if so, how much?

The scope of this article won’t allow us to explore all that’s involved in preparing a thorough Financial Plan, but please know that this process doesn’t have to be complicated. Mostly it just takes a commitment to going down this path and a willingness to spend the time to do so.

You can begin to put together a realistic look of your personal financial situation by following a simple 4-step Financial Planning process.

  1. Take Inventory – Understanding your current financial situation is an important first step. Gather all the documents, account statements, insurance policies, etc., that have any bearing on your financial life and take a “snapshot” of where you are today.

  2. Clearly Identify Your Financial Goals – Be as specific as you can here, with realistic dollar amounts tied to a time line. The better defined your goals are, the better prepared you are to make decisions that give you the best chance to achieve them.

  3. Create and Execute a Plan of Action – Armed with a solid understanding of your current financial situation and a clearly defined set of financial goals, now’s the time to set a course of action and execute your ideas.

  4. Monitor and Adjust – Things change. There may be events in your personal life or in the marketplace that cause you to think differently about your financial future. Financial Planning is not a one-time event, it’s an ongoing process. Remaining alert and flexible will be a key to your long-term success.

Remember; try to keep it simple, and let common sense and the ideas and strategies recommended by IAS Financial be your guide along the way. If you have questions about this article, please feel free to call Ted Black, CFP® at 888-878-0001, extension 3.