6 Steps to Creating a Great Financial Plan (2024)

The Financial Planning Process

If you're asking yourself, "do I need a financial plan?",the answer is yes!The first mistake that so many people make is thinking that they are too young, too old, or not wealthy enough to create a financial plan. The reality is that everyone can benefit from a great financial plan at any stage of life.

There are six basic steps you can take to determine the best route to achieve your financial goals and prepare for the future. While you can always try to create and implement a plan on your own, the team at Extraco Wealth & Trust has the expertise and resources to help you each step of the way.

Step 1: Set Goals

While this seems pretty basic,this step oftengets overlooked. Consider your short-term, long-term and "wouldn’t it be nice to have..."term goals.Be as honest as possible with yourself when setting your goals. After all, this is your life! How do you want to live it?

Step 2: Gather facts

Take the time needed to gather and organize your financial documents. This may include sorting through digital folders, paper file cabinets and tax records. Be sure to include assets and debts, cash flow, tax returns, insurance policies, wills and legal papers that could include relevant information.

Step 3: Identify challenges and opportunities

Take a moment to quantify the picture you have painted in your head. Identify any challenges or opportunities you might face as it pertains to cash flow and debts, college planning, retirement planning and risk management. Remember, this is just how things look today. We can work together to adjust your future.

Step 4: Develop your plan

Let’s get to the nitty-gritty. Your plan should take into consideration your values and risk tolerance. At the end of the day, your plan should provide you with a variety of options to consider and implement.

Step 5:Implement your plan

Taking action is quite possibly the hardest part of the planning process. Your plan may involve an increase in your regular savings, purchasing additional insurance,contributing to an IRA or making investments. Whatever the next step looks like for you, we can help.

Step 6:Follow up and review yearly

This final step is often overlooked and is critical to reaching your destination. You should review your plan annually to adjust your goalsfor your current life situation. While this may sound difficult, it isn’t! We’re always here to help you stay on track.

Working with a Consultant

Choosing to work with a professional who can provide a holistic plan is an important decision. There are specific certificationsthese individuals obtain to be considered a true Financial Planner.

At Extraco, our team of experienced and investment professionals is available to provide you strategic advice and solutions.

If you choose to use someone else, be sure to ask the appropriate questions:

  • What experience do you have?
  • What services do you offer?
  • Can you provide me with a complete range of products?
  • What’s your approach to financial planning?
  • How will I pay for your services?
  • Can I have it in writing?

It isimportant to go with professionals you can trust and that clearly understands your unique needs.

Ready to get started?

Let us help you with your financial planning goals.

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6 Steps to Creating a Great Financial Plan (2024)

FAQs

6 Steps to Creating a Great Financial Plan? ›

There are six steps in the financial planning process: understanding your financial circumstances, identifying goals, analyzing your current course of action, developing a financial plan, and monitoring progress and updating. This is a great question to ask if you're considering working with a financial planner.

What are the 6 steps of the financial planning process? ›

There are six steps in the financial planning process: understanding your financial circumstances, identifying goals, analyzing your current course of action, developing a financial plan, and monitoring progress and updating. This is a great question to ask if you're considering working with a financial planner.

What are the 6 parts of a financial plan? ›

Six Areas of Financial Planning
  • Cash reserve levels.
  • Cash reserve strategies.
  • Debt management.
  • Cash flow management.
  • Net worth.
  • Discretionary income.
  • Expected large inflow/outflow.
  • Lines of credit.

What are the 6 components of a successful financial plan for a business? ›

A business financial plan typically has six parts: sales forecasting, expense outlay, a statement of financial position, a cash flow projection, a break-even analysis and an operations plan. A good financial plan helps you manage cash flow and accounts for months when revenue might be lower than expected.

What are the 6 types of financial planning? ›

Types Of Financial Planning And Its Importance
  • Cash Flow Planning.
  • Investment Planning.
  • Insurance Planning.
  • Retirement Planning. Investment Options For Retirement Planning.
  • Tax Planning.
  • Estate Planning.
Dec 15, 2023

What are the six steps in developing a financial plan Quizlet? ›

Q-Chat
  • step 1: determine your current financial situation. ...
  • step 2: develop your financial goals. ...
  • step 3: Identify Alternative Courses of Action. ...
  • step 4: evaluate your alternatives. ...
  • step 5: create and use your financial plan of action. ...
  • step 6: review and revise plan.

What are the six steps to managing personal assets? ›

The following six steps can help you navigate your financial future.
  • Step 1: Manage your money well.
  • Step 2: Increase your income.
  • Step 3: Invest your money wisely.
  • Step 4: Bring all the pieces together.
  • Step 5: Preserve your wealth.
  • Step 6: Estate and trust considerations.

What are the 7 key components of financial planning? ›

A good financial plan contains seven key components:
  • Budgeting and taxes.
  • Managing liquidity, or ready access to cash.
  • Financing large purchases.
  • Managing your risk.
  • Investing your money.
  • Planning for retirement and the transfer of your wealth.
  • Communication and record keeping.

What are the six principles of finance quizlet? ›

The six principles of finance include (1) Money has a time value, (2) Higher returns are expected for taking on more risk, (3) Diversification of investments can reduce risk, (4) Financial markets are efficient in pricing securities, (5) Manager and stockholder objectives may differ, and (6) Reputation matters.

What are the 7 key components of financial planning Dave Ramsey? ›

Dave Ramsey's 7 Budgeting Baby Steps
  • Step 1: Start an Emergency Fund. ...
  • Step 2: Focus on Debts. ...
  • Step 3: Complete Your Emergency Fund. ...
  • Step 4: Save for Retirement. ...
  • Step 5: Save for College Funds. ...
  • Step 6: Pay Off Your House. ...
  • Step 7: Build Wealth.
Jun 1, 2023

What are the 5 key areas of financial planning? ›

In this blog, we explore the five key components of a financial plan and how they work together.
  • Investments. Investments are a vital part of a well-rounded financial plan. ...
  • Insurance. Protecting your assets—including yourself—is as important as growing your finances. ...
  • Retirement Strategy. ...
  • Trust and Estate Planning. ...
  • Taxes.
Feb 9, 2024

How do you create a successful financial plan? ›

9 steps in financial planning
  1. Set financial goals.
  2. Track your money.
  3. Budget for emergencies.
  4. Tackle high-interest debt.
  5. Plan for retirement.
  6. Optimize your finances with tax planning.
  7. Invest to build your future goals.
  8. Grow your financial well-being.
Jan 5, 2024

What are the six components of financial planning 12 points? ›

Effective Financial Planning involves far more than balancing your bank statement on a monthly basis. Major key elements are Cash-flow management, Investment management, Tax planning, Insurance assessment, Retirement planning, and Estate planning.

What are the golden rules of financial planning? ›

Start with identifying goals like buying a car or planning for retirement. Categorise those goals into short-term and long-term. Goals that can be achieved within 1 to 3 years are essentially short-term. Goals that need a horizon of 3-5 years are called medium-term goals.

What are the components of a financial plan? ›

8 Keys to Good Financial Plans
  • Setting financial goals. ...
  • Net worth statement. ...
  • Budget and cash flow planning. ...
  • Debt management plan. ...
  • Retirement plan. ...
  • Emergency funds. ...
  • Insurance coverage. ...
  • Estate plan.

What makes up a financial plan? ›

A financial plan is a comprehensive picture of your current finances, your financial goals and any strategies you've set to achieve those goals. Good financial planning should include details about your cash flow, savings, debt, investments, insurance and any other elements of your financial life.

What is the step 5 of financial planning? ›

Step 5: Monitor and evolve your financial plan

Review your personal financial plan every year or so. Start at the first step to get a snapshot of how your finances are doing, and make any necessary changes to the rest of your plan.

What does a basic financial plan include? ›

The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.

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