How Many Steps Are In the Financial Planning Process? (2024)

  • How Many Steps Are In the Financial Planning Process? (1)Mike Rogers
    • Feb 1, 2023
    • 4 min read

Updated: Mar 22

How Many Steps Are In the Financial Planning Process?

ByMike Rogers, AIF®, Founder and President of360 Financial

How many steps are in 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. We’ll help you understand the process.

TABLE OF CONTENTS

  1. What is the Financial Planning Process?

  2. What are the Steps in the Financial Planning Process?

  3. What are the Steps in Personal Financial Planning?

  4. Services 360 Financial Offers All Clients

What Is the Financial Planning Process?

The financial planning process documents your financial goals and the long-term strategy you will follow to achieve these goals. The plan is comprehensive but highly specific to your needs, obstacles, and goals. The financial planning process also includes implementing your plan, monitoring your financial progress, and making updates as needed.

A financial planner can help you every step of the way.

They help you make a plan to reach your financial goals, including:

  1. Budgeting

  2. Saving

  3. Retirement planning

  4. Investing

  5. Insurance

Now that you understand what the financial planning process is, we’ll break down the process into steps.

How Many Steps Are In the Financial Planning Process? (2)

What Are the Steps in the Financial Planning Process?

The financial planning process consists of six steps:

1 – Understanding your financial circumstances.

Your financial plan will be specific to you, so your financial planner will make sure they completely understand your financial circumstance. They’ll also try to understand your personal circumstances. This step ensures your financial plan is comprehensive and specific to your needs.

2 – Identifying goals.

Your financial planner will want to understand your top financial goals. Whether buying a house, saving for retirement, or creating a college fund, you will explain your financial goals.

3 – Analyzing your current course of action.

You’ll also explain what you’re currently doing with regard to your financial goals. Knowing where you’re starting from helps your financial planner create a more realistic plan to help you reach your goals.

4 – Developing financial planning recommendations.

Now that your financial planner knows all about your goals and situation, they will begin to create and record financial planning recommendations. They’ll present their recommendations to you, giving you options. At this point, it’s important you pick a plan that you’re comfortable and happy with.

5 – Implementing the financial plan.

Once you pick the plan you’re comfortable with, you’ll have to begin implementing it.

6 – Monitoring progress and updating.

As you implement your financial plan, you’ll monitor your progress. Then you can report back to your financial planner, and if something isn’t working, your financial planner will change it. On the flip side, if some aspects of your plan are working better than expected, your financial planner may adjust your plan to include more of the successful strategy.

Many people find financial planning easier when they work with a financial planner. Your financial planner will take the stress of making decisions off your shoulders, and they will only recommend their tried and true strategies.

Financial planners are professionals, and they can make the entire process easier for you.

What Are the Steps in Personal Financial Planning?

If you plan to work on your personal financial plan without hiring a financial planner, you’ll have to dedicate far more time to research, building strategies, and making decisions.

Here’s what the financial planning process looks like:

  1. Set your financial goals.

  2. Come to an understanding of what your current financial situation is.

  3. Analyze your current course of action.

  4. Research financial strategies to help you reach your specific financial goals.

  5. Build financial strategies, including alternatives so you have options.

  6. Choose your financial plan.

  7. Implement your financial plan.

  8. Monitor progress.

  9. Do research to update your current plan to meet your goals.

As you can see, when you do this process all on your own, it is much more involved than when you work with a financial planner. Many people prefer to work with a financial planner because they have to dedicate much less time to the process, and they typically get better results.

Key Takeaways

  1. The financial planning process includes setting your goals, implementing your plan, monitoring your progress, and updating your plan.

  2. A financial planner can make the entire process far easier for you. Doing the entire process alone can be far more work than you have time for.

  3. It pays off to hire an expert who knows how to help you pursue your goals.

Financial Planning and Wealth Management Services at 360

At 360 Financial, we care about your happiness and future. We’ll help you pursue your most important financial goals so you remain comfortable and confident in your future. We are financial advisors, wealth managers, and financial planners with years of experience helping our clients achieve their goals with a big-picture plan. We also help you with wealth management, estate planning, and retirement planning.

Schedule a 15-minute Call >>
How Many Steps Are In the Financial Planning Process? (5)

About the Author

Mike Rogers, AIF®

Mike Rogers is the founder and president of Minnesota-based financial advisory firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This unique, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters. In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question:“What’s important to you?”

Schedule an Advisor Call

At 360 Financial, our clients come first. You deserve personalized attention from an advisor at our firm. You’ll be happier and more confident to know that your needs always come first. Book a 15-minute introductory call with us today.

Schedule a 15-minute Call >>

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How Many Steps Are In the Financial Planning Process? (2024)

FAQs

How Many Steps Are In the Financial Planning Process? ›

The five steps in the financial planning process​ are: ​(Select the best answer​ below.) A. evaluate your financial​ goals, define your career​ goals, develop a plan of​ action, implement your​ plan, and​ finally, review your​ progress, reevaluate, and revise your plan.

How many steps are in the financial planning process? ›

There are six stages to develop a financial plan and to carry out personal money management. From beginning to end, a certified financial planner professional guides you through the financial planning process - keeping in view your current financial situation and economic background.

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

The Financial Planning Process
  • Step 1: Set Goals. While this seems pretty basic, this step often gets overlooked. ...
  • Step 2: Gather facts. ...
  • Step 3: Identify challenges and opportunities. ...
  • Step 4: Develop your plan. ...
  • Step 5: Implement your plan. ...
  • Step 6: Follow up and review yearly.

What are the key aspects of a financial planning process are ________? ›

Understand that the key aspects of financial planning include operations planning, which involves developing a strategy for business operations, and investment planning, which deals with how to invest money to reach certain goals.

What are the 7 components of a financial plan? ›

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 is financial planning and its steps? ›

It involves chalking out a plan listing all your future goals and estimating the capital required for their completion. You then plan out the financial means to attain them. It may involve saving, investment, and administration of funds, among others.

What are the 5 steps of financial planning? ›

Plan your financial future in 5 steps
  • Step 1: Assess your financial foothold. ...
  • Step 2: Define your financial goals. ...
  • Step 3: Research financial strategies. ...
  • Step 4: Put your financial plan into action. ...
  • Step 5: Monitor and evolve your financial plan.

What are the 6 parts of a financial plan? ›

The six components of a financial plan include tracking income and expenses, budgeting, saving and investing, insurance, and retirement planning. By understanding and implementing these components, freelancers can create a secure financial future. It's essential to start planning as soon as possible.

What are the 4 basics of financial planning? ›

Use this step-by-step financial planning guide to become more engaged with your finances now and into the future.
  • Assess your financial situation and typical expenses. ...
  • Set your financial goals. ...
  • Create a plan that reflects the present and future. ...
  • Fund your goals through saving and investing.
Apr 21, 2023

What is the most important step in financial planning? ›

Establish Clear Goals

In order to kickstart the financial planning process, the first crucial step is to establish crystal-clear goals. This entails identifying your financial objectives, be it saving for retirement, creating an emergency fund, or eliminating debt.

What are the three processes of financial planning? ›

Organization, efficiency and discipline can be considered as three primary steps of financial planning. Organization is knowing where your money comes and goes.

What are the 8 steps of financial planning? ›

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 is basic financial planning? ›

Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more.

What are the 7 key components of financial planning according to 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.
5 days ago

What are the 4 steps of financial management? ›

Use this step-by-step financial planning guide to become more engaged with your finances now and into the future.
  1. Assess your financial situation and typical expenses. ...
  2. Set your financial goals. ...
  3. Create a plan that reflects the present and future. ...
  4. Fund your goals through saving and investing.
Apr 21, 2023

What are the four 4 process of financial management? ›

The Four elements of Financial Management
  • Planning. Identify the steps that align with the association or individual objectives. ...
  • Controlling. Ensure each aspect of the association follows the established plan. ...
  • Organizing and directing. ...
  • Decision making.
Nov 15, 2023

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