What use is a plan without a goal right? Deciding what your financial goals are is likely the most important step of the financial planning process. You don’t need to restrict yourself to a single goal, but you will need to organize them effectively. Write down your preferred goals and try to remove any that are unrealistic based on your current situation (a private island comes to mind). Sort your goals into both short and long-term categories so that there is a defined path. Short-term goals are easier to reach and also give you that sense of satisfaction when completing them that can feel out of reach for goals that are many years away. Once you have all your goals organized, move onto the next step.
Reviewing Your Financial Situation
Your financial situation is a collection of your income, expenditures, assets, and anything that has to do with your overall finances. It is important to both review and calculate your situation as it will help you determine how quickly you can reasonably obtain your goals. Start tracking your spending to see where your money goes, and look back several months as well. Many banks or free programs offer this feature if you need help. By completing this you should know where you can afford a little cutback if necessary, as well as how much you can tuck away annually if you were to stick to a budget. Understanding the parts in your plan that are able to give or take can keep you better prepared in the event of surprises. Remember your goal is not to set a financial plan at this step, but to equip you with the tools and information to do so when you are ready.
Building Your Financial Plan
Now armed with the complete picture of your financial system as well as goals you would like to achieve, making your plan can actually begin. It is at this point that obtaining the services of a financial advisor is recommended. You then arrive both knowing what you want, and the options available to help get there. A financial advisor can help you decide on a course of action, direct you in investment decisions, and otherwise help you potentially grow your wealth. You can also create your financial plan on your own, but you are limited by your own knowledge and experience.
These are just the beginning steps of the constantly evolving journey that is financial planning. Bear in mind that you should never begin financial planning expecting all to go perfectly in your ultimate plan. Having alternate options and failsafes are important and can dissuade you from giving up on your goals at the first sign of struggle. For more information on financial planning services, contact our team at BD Financial Concepts today.