What Does the Financial Planning Process Begin With?

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Written By Ankita Kaushal

Many people are unfamiliar with what goes into financial planning.

Financial planning is not at all easy considering that you have to decide upon your future financial self which completely depends upon your current financial situation. Financial planning amidst if you are doing it just on your part without any help can be stressful as well as a tedious task to think upon.

This is where people help you in planning your finances. The issue still pertains to, are your finances properly managed? What if you need more savings in the current time to achieve those $ 100 million goals.

A Certified Financial Planner can be of great help to you at this particular time which not only manages your finances but also drafts a financial plan for you to follow upon.

But before we dig deeper into the topic let’s first talk about what is financial planning and how is that beneficial to us.

What is the Financial Planning Process?

What does the Financial 6 Perfect Planning process begin with?

The financial process is just about following the steps and making a plan on how to manage your expenses and help achieve your financial goals.

The process allows you to take care of your expenses and take control of your financial expenses. The process also inculcates the right path when it comes to managing and saving your expenses.

A Certified Financial Planner is thereby preferred when it comes to managing your finances, a financial planner will look at your current spending limits, your investments, your current financial situation, and your long term as well as short term goals.

They might even help you in making an estate finance plan when the time comes. Therefore, the process is so tiring and cumbersome when people decide to start planning their finances on their own.

Let’s first discuss the financial steps involved when managing your finances for the first time.

Financial Planning Steps For Managing Your Finances

The steps given below are a part of the Certified Financial Planner Board of Standards’ code of ethics and standards. A practiced CFP is required to know and follow these steps starting with establishing the relationship.

The steps are given below:

  • Establishing the relationship and goal.
  • Gather data.
  • Analyze the data.
  • Develop a plan.
  • Implement the plan.
  • Monitoring the plan.

Today, we will just talk about how you can establish a relationship and set your goals depending on the financial plans you will decide on.

Establishing relationships and goals

What is the first thing you do, when you are planning to build your own house? You plan your steps like where you will possibly take the land for making your house, how much land will be required, what all things you need to take care of while making a blueprint for your house etc.

What does the Financial 6 Perfect Planning process begin with?

The same things are taken into account when talking about establishing the goal or relationship.

Establishing the relationship is where the adviser introduces himself or herself to the person who wants to get a financially stable living and talks about the financial planning process. The CFP(Certified Financial Planner) may ask some brief questions to know the necessary information needed while drafting out a plan.

The information might include a diverse variety of topics ranging from financial goals to the risk of investing in the market, from your current financial situation to how you wanna end up living your long-term goals.

The first step in Financial Planning always encompasses what you have and what are your efforts which you will need to grow that small amount of money into a pretty hefty sum by using your investments, incomes, managing your expenses, etc. and in this process, you will always need a CFP to help you out in planning and executing everything.

It is important for the CFP to establish a completely open relationship so you can discuss or disclose your financial matter which you won’t share with anyone else.

A professional financial planner will collect a variety of information along with a variety of documents such as a list of debt balances and current assets and determine upon those documents where is the person standing financially and what or how much effort might be needed to reach that long term financial goal of theirs.

A certified financial planner can ask some questions like:

  • What are your feelings about investing in the stock market and why so?
  • What are your investments? When was the last time you invested in something?
  • What are your financial strengths and weaknesses?
  • What sum of money do you plan on having in retirement?
  • What steps are you taking currently to make that goal reachable?

These are some of the questions which a CFP can ask, the questions are important to be evaluated because it will judge upon how are you taking your expenses and investments seriously.

What does the Financial 6 Perfect Planning process begin with?Some CFP ask some personal questions as well like,” How many members are there in your family?”, “Are they doing some sort of Investment?” etc.

These questions just enable the CFP to help develop a better understanding of how and when to start managing your expenses so that on retirement you are already financially stable.

Establishing financial goals is not an easy-to-do task, you are required to put in the extra effort and just make a proper future goal which can be long-term as well as short-term goals depending upon how you intend to invest and save money.

You can follow these five steps to help you decide your financial goals:

  • Write down your goals, every time you think of a financial goal just write it down.
  • Make them specific, don’t just write, “ I want to be with better money”, don’t make them vague.
  • Make a deadline for the goal.
  • Make sure the Goal is measurable.
  • Make sure they are your OWN goals.

Long-term goals, people when talking about long-term goals keep some long-term goals that are barely achievable, and then they spend their savings casually since there is no goal left achievable. Every time you are planning on making a Financial Plan always make sure you do note down your income, current savings, and your income amount.

These three things are the most important factor to consider whenever you are talking about Financial Planning. If your expenses which you do weekly or monthly are properly managed then these can act as a great multiplier to your savings but on the other hand, if you are properly managing your savings then you will have to live on paychecks to paycheck, you will not be left with any savings.

Establishing goals is just a guiding path to direct and investment objectives, managing cash and insurances, and other financial needs to help achieve your particular financial goals.

The next step includes how you are going to walk through your financial plan and make it achievable. Financial planning is not easy or fun to do, instead, it is the task that takes away your smile when you get to know your daily or monthly expenses.

Financial Planning with proper guidance can help you the most if you are going through a critical financial situation but at the same time, you just need to follow what your CFP decided for you as an overall growth to your financially stable position.

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