Steps in the Financial Planning Process: What You Need to Know


We spend a lot of our lives planning, from trips and vacations to how to decorate the living room. But there’s one area you should be focusing on if you haven’t already, especially if you want a secure financial future: financial planning.

You may be thinking that financial planning is only for the very wealthy, but you’d be wrong. A financial plan can help anyone achieve their financial goals, both for now and for the future. If you’re interested in creating a financial plan, you should know a little about the process.

Certified financial planners (CFPs) practice according to guidelines set up by the Certified Financial Planner Board of Standards, following a code of ethics and standard practices. For most certified financial planners, getting a financial plan started for a client involves these main steps:

1. Identify Your Goals

The first step of any effective financial plan is to establish goals for yourself. Are you saving for retirement? Trying to pay down debt? Purchasing your first home? All of these can contribute to how you see your future finances and help you or your professional financial planner create a workable plan for you.

Goals Target

If you do decide to work with a professional, this is also the stage at which you will establish your relationship. You will talk with your financial planner about your goals, financial views, and anything else that might be relevant to helping you achieve financial success.  It is important to have the eventual plan in writing, so that you have “a track to run on” so to speak, and so that changes can be made to the base plan over time, as your personal circumstances change.

2. Gather Data

Once you’ve established some goals, it’s time to gather data. This can include several aspects of both your personal and financial information. You’ll need to tally your income, expenditures, and any assets or liabilities so you or your financial advisor can get a good picture of the current state of your finances.

Additionally, this is a chance for you to better understand your feelings about investments and money management. What is your personal risk tolerance? What’s your policy on investments? All of this information will help you to rank your priorities appropriately, making it easier for you to decide where to allocate your funds.

3. Analyze the Data

After collecting all that data, it’s now time to analyze it and figure out what it means for your finances. For example, if you are planning on purchasing your first home, you can take a look at your current financial situation and the amount you are saving right now.

With a timeframe in mind, you can calculate the end amount you will have for your down payment. Is it enough? If your projections don’t show that you will meet your goals, you can make adjustments!

4. Develop the Plan

Now that all of these introductory steps are completed, it’s time to create an actual plan for your finances. If you are working with a professional financial planner, they will help devise solutions that can work best for achieving your own specific financial goals. The key point in this phase is the word ‘develop,’ since there will be adjustments required throughout this process.

You will need to be able to adapt your plan depending on your individual situation. There are many options and numerous variables that must be considered, and not every strategy will work for every person. Make sure you leave room to keep your plan flexible as your needs change; that way, if your goals shift, you can adjust your plan accordingly.

5. Implement and Monitor the Plan

Once your plan is all set and ready to go, it’s time to implement! For many people, putting a new financial plan into practice can be the most challenging aspect of the process. Like any new endeavor, it will take dedication and discipline, but the efforts will be well worth it as you get closer to your goals.

Additionally, it is important to remember that as you move through life, your situation (and therefore your goals) may change. Financial planning must include the monitoring of your finances and personal situations. Otherwise, you might not be getting the most out of your plan.

When working with most professional financial planners, monitoring and adjusting of your plan will be considered a standard part of their practice. But if you are working on your own, then you need to ensure that you make any necessary adjustments.

Whether you work on your own or with a professional, you can use these steps to help you create a financial plan that can work for you both right now and in your future. If you haven’t started planning for your financial future yet, get started today.

Published by Robert Ryerson

A financial professional with more than three decades of experience, Robert Ryerson works closely with clients in the Freehold, New Jersey, area to meet their financial planning needs. As a Certified Financial Planner (CFP) at New Century Planning, he focuses on retirement income planning, as well as estate administration, regularly assisting his clients with legacy and estate planning. He also advises them on health and disability insurance, including Medicare, Medicaid, and Medicare Supplement Plans. Mr. Ryerson’s many years helping his clients navigate the complexities of retirement planning gave him a deeper understanding of the healthcare costs that retirees face. In 2013, he drew upon this knowledge to co-author the book What You Don’t Know About Retirement Will Hurt You. Outside of his work at New Century Planning, Robert M. Ryerson is a regular fixture at workshops and seminars on retirement. He has delivered several keynote speeches on the often-confusing topic of required minimum distributions. Mr. Ryerson continues to share his financial expertise as a facilitator of online courses for Certified Public Accountants through The Society for Financial Awareness. In the early 2010s, Mr. Ryerson became concerned about the threat of identity theft after noting the many cybersecurity breaches suffered by major companies. He became a Certified Identity Theft Risk Management Specialist (CITRMS) in 2014. He has since taught identity theft recovery courses at local community colleges. Mr. Ryerson also wrote a book on the topic entitled What’s the Deal with Identity Theft: A Plain English Look at Our Fastest Growing Crime. A graduate of Rutgers University with a degree in economics, Mr. Ryerson began his career in the financial services industry as a stockbroker. He obtained his CFP designation in 1991 and began working as an independent financial planner a few years later. In addition, he is a notary public.

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