Financial Planning


Identify the best strategies for financial planning and the steps used by financial planners to help clients create a financial plan.

Early Findings

  • The first step to financial planning involves setting financial goals. Advisors suggest thinking about both short and long-term financial goals, such as saving, investing, and retirement. Best practices include being as specific as possible and ranking goals in order of priority.
  • Next, the individual's net worth, cash flow, and assets should be identified to understand their current financial position. This accounting should include things like bank accounts, real estate, personal property, credit cards, and debt.
  • Advisors then suggest creating a budget that takes into account the information collected in the previous step. A budget should consider essential expenses, nonessential expenses, and savings. A good budget includes spending less than one is earning and saving the surplus. NerdWallet suggests starting with a basic 50/30/20 budget; spend 50% of earnings on essential expenses (housing, food, bills), 30% on nonessential expenses (clothing, entertainment), and 20% on savings and retirement.
  • Another key to successful financial planning is saving for emergencies and for retirement. An emergency fund helps an individual avoid the need to go into debt for unexpected expenses like medical bills or car problems.

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