Five Key Financial Planning Steps You Must Know

This is the last post for National Financial Planning Month. I’ve been writing about financial planning for quite some time now, and I think it’s good to periodically review the meaning of the term. Remember, financial planning is a process. It’s a living process and it evolves and changes. It’s not just investing. Financial planning helps you make sensible, sound financial decisions determining how to meet your goals through proper management of financial resources. Here are the five basic steps to know.


First, get organized. Gather your documents so that you know what you have. Be sure to look for everything you can think of like bank statements, investment statements, insurance policies, mortgage or lease, and work benefits just to name a few. You should keep all of your vital documents together in one binder. That way, if you have to evacuate your home you can just grab your binder and go.

Second, you need to know what you owe and what you own. This is key in establishing your goals and determining how long it may take you to reach your goals. Prepare a basic cash flow statement to determine your net worth. List all your assets and total them up. Next, list all of your liabilities and total those. Your assets minus liabilities equals your net worth. Ideally, this is a positive number!

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Third, conquer your cash flow. You need to add up all money that comes in every month, and all of your monthly expenses. This cash in, cash out, is your cash flow. Your goal is to always have more inflow than outflow. This means you need to examine your wants and needs and truly grasp the difference. Further, you need to be intentional about where you spend your money so that it works harder for you, rather than you work for it. Remember, always pay yourself first!

Fourth, mitigate your risk! Risk can be a wealth killer. Review your insurance for proper coverage (don’t buy too much, don’t buy too little), tackle your debt, build an appropriate cash emergency fund, and have your estate planning documents in place. Rich or poor, single or married, everyone needs to manage their risk. For help, reach out to a Certified Financial Planner™.

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Fifth, it’s time to put it all together. Set your goals, be specific and write them down. Determine what steps you need to take to put your plan in action. Finally, do just that – implement your plan. Keep in mind that you need to monitor your plan and be flexible.

These are just the basics. Each step above can encompass many aspects and is very specific to your situation. Don’t know where to start, call me! As an independent Certified Financial Planner™, I can help you establish and maintain your financial plan. Let’s get started! #talktometuesday #education #Hireaplanner #FinancialLiteracyMonth #NationalFinancialLiteracyMonth #financialsavvy #financialplan