The Financial Planning Process in 6 Steps (2024)

What Is the Financial Planning Process?

The financial planning process includes the general six steps you’ll follow when working with a financial professional. By following the financial planning process, your financial planner can help you establish a path to achieve your financial goals.

Understanding the financial planning process can help you make better decisions with your money and prepare for the future. Thorough financial planning can help you determine your financial goals and the necessary steps to reach them, whether you want to save up to buy a home or start investing to prepare for retirement.

In this article, we’ll take a look at some of the most important steps in the financial planning process to help you get a better understanding of how it works and what to expect. We’ll discuss everything from finding a financial planner to reviewing your progress and making adjustments. Keep reading or use the links below to learn more about financial planning.

  • What Is the Financial Planning Process?
  • 6 Steps of the Financial Planning Process
  • How to Find a Financial Planner
  • Start Your Financial Planning Journey

What Is the Financial Planning Process?

While creating a budget is one way to get your finances in order, it’s not the same as full-on financial planning. Proper financial planning means creating a written plan that outlines your financial journey from start to finish. This is a process that’s used by both individuals and businesses.

A comprehensive financial plan includes information about the past, present, and future. You may want to take a look at everything when it comes to your financial situation, including but not limited to:

  • Your financial goals
  • Your current income
  • How much debt you owe
  • Your investments
  • Employment retirement plans

The goal of financial planning is to create a comprehensive plan that accounts for everything while helping you work toward your financial goals. In fact, 65% of people with a written financial plan say they feel financially stable.

The Financial Planning Process in 6 Steps (1)

For many people, working with a financial planner is the best way to formulate the right financial plan. A financial planner can help you look at all the factors that affect your financial situation, including your income, the amount of debt you’re in, and any potential investment opportunities. Thorough planning is an important part of meeting your long-term financial goals.

6 Steps of the Financial Planning Process

If you want to plan for the future, it’s important to consider all the factors that may affect your finances. Following the financial planning process steps helps you create a financial plan that fits your future. Whether you want to have enough to retire or save up to buy your first home, here are 6 important steps in the personal financial planning process.

The Financial Planning Process in 6 Steps (2)
  1. Meeting with Your Financial Planner

Meeting with a financial planner could help you get a better understanding of your financial situation and what you need to do to meet your goals. Choosing the right financial planner can be essential if you’re going to work with one. Remember, not all financial advisors are qualified financial planners, but financial planners are a type of financial advisor.

When you meet with your financial planner, make sure you provide any information that may be relevant to your financial situation. Information you can share with your financial planner includes your current income, your current debt, any investments you’ve made, your monthly budget, and your most recent tax return. The more information you can give your financial planner, the better they can tailor your financial plan to your needs.

The Financial Planning Process in 6 Steps (3)
  1. Financial Evaluation

Now that you’ve met with your financial planner and discussed your financial situation, it’s time to evaluate your finances to get a better idea of where you’re at and what you need to do moving forward. This is when you’ll look at things like the amount of debt you’re in and how long it would realistically take to pay that debt off. Your financial planner will likely do a deep dive into your financial circumstances for the most thorough evaluation possible.

Keep in mind that each individual has a different financial situation, and the specifics of your evaluation and financial plan may change based on your situation.

  1. Setting Goals & Planning

Your financial goals are one of the cornerstones of your financial plan. Once you have a better idea of your current situation, you can work on setting goals and creating a plan that is designed to help you work toward financial wellness. There are no set rules when it comes to creating financial goals; your goals don’t have to be the same as anyone else’s.

The Financial Planning Process in 6 Steps (4)

The financial planning process can include just about any financial goal you can imagine. Perhaps you’ve always wanted to own a vacation home, or maybe you want to save enough to pay for your child’s college expenses. Take some time to sit down with your financial planner and set realistic financial goals that you can work toward.

  1. Implementing the Plan

While setting goals is a key part of the financial planning process, implementing your plan and working to meet those goals may be the most important step. Implementing your financial plan serves two important purposes:

  1. Your financial plan can be used to begin working toward a better financial future.
  2. Implementing your financial plan gives you an opportunity to see what works and what doesn’t.

It’s important to keep in mind that you might not see the results you want to see right away. Improving your financial situation takes time, especially if you’ve set long-term goals. Financial wellness is a long-term game, so don’t get discouraged if things aren’t happening as quickly as you’d like.

Many people find that implementing a financial plan and sticking can turn their financial situation around, even if it takes a while.

  1. Reviewing Progress & Adjusting

Ideally, your financial plan would be something you can follow to a T with little-to-no change. However, that’s rarely the case because life throws changes at you. As such, you may want to keep an eye on your progress after you’ve implemented your financial plan. Once you’ve set clear goals for yourself, you can review your progress and your financial plan to see whether you’re on track to reach those goals. If you’re not moving in the right direction, that may be the time to talk to your financial planner about making adjustments.

It can be frustrating when parts of your financial plan don’t work out, but it’s important to remember that you’re playing a long-term game. It may take a while to figure out the best course of action to reach your goals, but fine tuning your plan and being open to adjustments as needed is a natural part of that process. That’s why your financial planner is there to help guide you.

The Financial Planning Process in 6 Steps (5)
  1. Ongoing Collaborative Relationship

Just because you’ve created a solid financial plan doesn’t mean you’re done working with your financial planner. Financial wellness takes time and effort, so you typically can’t expect to reach your goals right away–at least the big-picture ones. An ongoing collaborative relationship between you and your financial provider is a major part of helping you stay the course.

In addition to maintaining a collaborative relationship with your financial planner, you may also consider prioritizing financial literacy and other financial skills in your day-to-day life. Learning how to create a budget and stick to it, build your credit, and save your money are all skills that could play a role in your financial stability.

Remember, financial wellness doesn’t come overnight, especially if you’re in a precarious situation. The more effort you put in, the more you could potentially benefit from the process.

If you work with a Certified Financial Planner (CFP®) professional, this guide will give you further insight for what to expect.

How to Find a Financial Planner

Financial planners play an important role in the financial planning process, but how do you find one? Here are a few things to keep in mind as you search:

  • Understand your needs: Think about what your goals are and what type of financial planner you need. Do you want to invest? Are you planning for retirement? Answering these questions can help you choose a financial planner who suits your needs.
  • Consider reputation: You want a trustworthy financial planner, so look at reviews and ask around for recommendations. You may want to avoid financial planners who have a large number of negative reviews.
  • Get to know them: Before you start working with a financial planner, consider getting to know them a bit. Usually this is done with a consultation. As important as reputation and experience are, it’s also important to find a financial planner who you’re comfortable working with.

Take your time when you’re looking for a financial planner. This is a big decision, so you may want to avoid choosing the first available planner if you feel like they might not be a good fit.

Start Your Financial Planning Journey

Getting started with the financial planning process can help you prepare for the future and put yourself in a better financial situation. By following the 6 steps we talked about earlier, you can start your financial planning journey today.

Do you need help managing your finances and achieving financial wellness? The Mint app makes it easier to manage your personal finances all in one place. Try the Mint app today and simplify your personal finance management.

Sources: Certified Financial Planner Board of Standards, Inc. | Schwab’s 2021 Modern Wealth Survey

Read through these additional financial planning resources:

Online Advisor

Learn more about online financial advisors.

Financial Tips

Review these personal finance tips.

Financial Health

Get a better understanding of your financial health.

Risk Tolerance

Evaluate your personal risk tolerance.

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Cost of Goods Sold Formula: A Step-by-Step Guide

I bring a wealth of expertise in financial planning, having worked extensively in the field, and can offer valuable insights into the comprehensive financial planning process outlined in the provided article.

The financial planning process involves six essential steps, each crucial in helping individuals and businesses achieve their financial goals:

1. Understanding the Financial Planning Process

Financial planning goes beyond creating a budget; it involves crafting a written plan that covers your financial journey comprehensively. This plan includes past, present, and future aspects of your financial situation, encompassing factors like financial goals, current income, debt, investments, and employment retirement plans.

2. 6 Steps of the Financial Planning Process

a. Meeting with Your Financial Planner

Choosing the right financial planner is crucial, as not all financial advisors are qualified financial planners. During this step, providing relevant information such as current income, debt, investments, monthly budget, and tax return is essential for tailoring the financial plan to individual needs.

b. Financial Evaluation

After the initial meeting, a thorough evaluation of your financial situation takes place. This involves assessing the amount of debt, realistic timelines for debt payoff, and a deep dive into individual financial circumstances.

c. Setting Goals & Planning

Financial goals form the cornerstone of the financial plan. After understanding the current situation, individuals work with their financial planner to set realistic goals. These goals can range from owning a vacation home to saving for a child's college expenses.

d. Implementing the Plan

Setting goals is crucial, but implementing the financial plan and actively working towards those goals are equally important. This step serves the dual purpose of initiating progress towards a better financial future and providing insights into what strategies work.

e. Reviewing Progress & Adjusting

Life brings changes, and periodic reviews of your progress against the financial plan are essential. If necessary, adjustments can be made to ensure alignment with your goals. Patience is key, as financial wellness is a long-term endeavor.

f. Ongoing Collaborative Relationship

Creating a solid financial plan doesn't mark the end of the collaboration with your financial planner. Financial wellness requires ongoing effort, and maintaining a collaborative relationship helps individuals stay on course. Prioritizing financial literacy and skills in day-to-day life further contributes to overall financial stability.

3. How to Find a Financial Planner

Finding the right financial planner involves understanding your needs, considering reputation through reviews and recommendations, getting to know the planner through consultations, and taking the time to make a well-informed decision.

4. Start Your Financial Planning Journey

Embarking on the financial planning process, guided by the six steps outlined, can help individuals prepare for the future and improve their financial situations over time.

This comprehensive approach to financial planning emphasizes the importance of collaboration with a qualified financial planner and ongoing efforts towards financial wellness.

The Financial Planning Process in 6 Steps (2024)

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