6 Steps of Financial Planning

Contrary to popular opinion, Financial Planning process is not a boring or yawn-inducing activity that takes forever. Yes, Financial Planning is an ongoing activity & needs constant monitoring and reviews but in its very essence Financial Planning is a 6-step process aimed at overall financial welfare of your Personal Finances.

STEP 1: - Establish Client-Planner Relationships

The very first step of Financial Planning Is Establishing a “Client-Planner” relationship. Financial Planning is a very Personal & Intimate relationship where honesty is a necessity. Sharing your Finances with a stranger is difficult and indeed hard to hear when this “Stranger” tells you that your Finances are wrong. But a Financial Planning process will benefit you only when you consider your planner to be your professional- friend, who only wants what is best for you. 

STEP 2: - GATHERING PROPER - DATA

Data is key. Properly provided data will lead to a proper roadmap. Yes, data is important for a planner, but is it more important for the client, you. We all have those forgotten Insurance policies, bought because a relative is an agent, and numerous bank accounts, mostly unused and investments made and forgotten. By providing us the data, you are yourself keeping track of these “Forgotten-Investments”, kept rotting away, providing negative returns. Hence, when we say Data is key, you can very well take it to the bank!

STEP 3: - ANALYSING & EVALUATING YOUR CURRENT SITUATION  

Without knowing where you stand, it is impossible to acknowledge your future goals. Therefore the most important step of financial planning is to understand your current Financial Situation. Herein, we evaluate your assets, liabilities, insurance portfolio, and current investments and try to ascertain whether you are buying or holding assets unnecessarily or maintaining high debt, continuing with Insurance Policies which provides next to zero returns at abnormal premiums and so on. Only after understanding your Past Investing & savings habit, can we outline your Future Financial Plan.  

STEP 4: - DEVELOPING YOUR FINANCIAL PLAN

This is done by us. Your share of hard-work is “partly” done. But only partly. We, the Financial Planner, will develop a Financial Plan outlining your current situations, Goal Planning & recommendations. The Financial Plan is divided into 6 parts: NetWorth Analysis, Cash flow analysis, insurance analysis, Investment Analysis, Goal-Linking & recommendations. We then present you with your Financial Plan.

STEP 5: - IMPLEMENTATION OF FINANCIAL PLAN

Action provides results. Only getting a financial Plan done is not the end. You need to work on these suggestions. Financial Planning s a fee-based service and you need to get your money’s worth. And your money is worth more than a 30-page Financial Plan gathering dust in your cupboard waiting for your “Tomorrow”. Act Now should be your Mantra. “Dekhenge” Policy will not work. You need to stop being lazy and get working on your Recommendations.

STEP 6: - MONITORING & PERIODIC REVIEW

Yay! The hard-part is over. You have done it. You have reached the finale of Financial Planning, the “Review & Monitor” stage. No Plan is perfect. A plan which works today, may not work 2 years down the line because your job might change or changes in taxation etc. Every Plan needs review & monitoring. We have already quoted”Financial Planning is a Lifetime ongoing process” and needs thorough dedication.

So, buck up, the journey has just started & yes, it does promise a few speed-bumps along the way, but one thing is certain, your destination will be AWESOME!