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Top 10 Keys To Financial Planning Success – Step by Step Guide

What really is financial planning? How do you establish a financial plan depending on your financial goals, timeline, and risk tolerance? This is all we are going to explore in this article to give you the proper guidance you need. Have you been having difficulties in managing your finances or you don’t really know the intricacies involved in it? Then I will be more than happy to take you through the entire process.Top 10 Keys To Financial Planning Success – Step by Step Guide

What is Financial Planning?

In financial planning, an individual establishes a financial plan based on financial goals, timeline, and risk tolerance. Financial planning is the way an individual plans for his or her money activities during a specified period of time. In financial planning, an individual plans on managing current income and taking charge of spending habits. It also involves forecasting future expenses and making informed decisions as regards investments.

The aim of financial planning is to ensure that individuals have enough money at some point in their life when the need arises. It involves setting clear priorities in order to organize your finances effectively.

What can a good financial plan help you achieve?

A good financial plan can help you achieve your short-term goals say, within 5 years. It will also help you achieve your long-term goals and help you improve your financial position. Furthermore, it can help you plan for your retirement age step by step.

It is not only individuals who can carry out financial planning. Small business owners as well as professionals who wish to secure their future can also take part in financial planning. Financial planning helps you to avoid being stranded at any point in your life.

Even though the art of financial planning may seem overwhelming because of the everyday hustle and bustle here. There are still steps you can use to plan your finances. What are these steps?

The 10 Best Simple and Easy Steps For The Financial Planning

When we talk about financial planning, we mean a structured financial plan, which offers financial guidance. This guidance includes how an individual can meet his or her financial goals and objectives effectively. Financial planning also involves an analysis of the current financial position. It also comes along with the identification of the areas that require improvement in order to achieve your financial goals.

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When doing financial planning, what’s the first step you are to take?

Define Financial Goals – Top 10 Keys To Financial Planning Success – Step by Step Guide

Defining your financial goals is the first step you should take. Financial goals are similar to career objectives. They provide direction and focus to your actions over time and help motivate you in achieving them in a disciplined way. You can categorize your financial goals into three parts – short-term goals (1 year or less), mid-long term goals (5 years or more), and retirement goals. After you have defined your financial goals, this will help you in achieving financial success.

Set Financial Boundaries

The next thing you are to do is to know financial boundaries. Your financial plan will be meaningless if they are not affordable. Thus you have to make your financial goals affordable. This will help you allocate funds for short-term, long-term, and retirement goals. We understand that different people have different financial constraints based on their income level, age, and the responsibilities of their family members. After you have evaluated your monthly income (take-home pay) at present, you can now decide how much savings you can set aside every month for the next 5 years before retiring from work. This will help you in deciding financial allocations as well in tracking your progress toward financial freedom/retirement.

Set Financial Priorities

The best medium is to set financial priorities for all your financial goals. This will help you in Financial decision-making over a specified period of time. Setting financial priorities can change over time. This depends on various factors like total income or expenditure in the family, marriage, birth of new child/children, or other unexpected events. However, financial priorities should not be changed too often. This is because changing them every 6 months may lead to wrong financial planning.

Retirement planning does not necessarily need frequent changes in the financial plan. This is unlike other financial goals that demand flexibility because of life changes. Like children’s education or marriage or house purchase. Financial priorities cover financial security, financial independence, and financial freedom.

Plan For Financial Resources

Financial resources would include financial assets, financial liabilities, money market funds, and others. Also, Financial assets are savings, stocks, and mutual fund units, which are designed to help you meet your financial goals. However, Financial liabilities on the other hand include the amount of debt you owe to banks and other financial institutions. This can be for home/personal loans (or any kind of loans), credit cards, and others. This helps in keeping track of your financial position and financial resources play an important role in financial planning. It is quite important in planning for the right kind of financial resources which will help you achieve your goals effectively.

Plan for Debts – Top 10 Keys To Financial Planning Success – Step by Step Guide

Planning for debts is also very important as financial debt is an important financial liability. Financial debt covers loans, debt securities, etc. You can categorize financial debt into two groups – short-term and long-term financial debt.

Short-term financial debts –This category includes credit cards. If you know how to use them wisely, it may help in making payments for larger purchases right now. However, it should not be used as a long-term financial resource. Interest on this type of financial debt tends to increase over time as such it will keep increasing your total outstanding balance.

Long-term financial debt –This is the type of financial debt, which includes home loans, student loans, or any kind of loan taken by you or your family members. It may be for financial goals like home purchases or for any other financial events which will take place in the future. Financial debt is a must while achieving financial goals. Financial debt includes financial loans, financial bonds as well as financial instruments.

Plan For Estate Planning

Financial Estate Planning will help you decide where your financial assets should be appropriated after death. Financial Estate Planning involves setting up mechanisms to transfer financial assets on death. But understand that the arrangements you make now may determine how much of the estate you leave behind for your loved ones.

You can plan Financial Estate Planning via Financial Investment, Financial Protection/Insurance or Financial Powers of Attorney.

Plan For Emergency Funds Financial

Emergency Funds can come in handy for you in financial planning for financial goals. A good example is when a financial crisis strikes. financial emergencies or any other unplanned financial event. These financial funds can also be used in meeting your financial goals if there is a delay in the expected financial returns on your investment.

Financial emergencies can include sudden loss of income (unemployment etc.). As you know, medical emergencies and other unforeseen expenditures can pop up without prior notice during the financial planning process.

Emergency Funds are usually kept separate from the rest of your financial assets to aid for quick withdrawals. They are to cover at least 2 months expenses. The best part is that you can keep this fund as cash at home, mutual fund, insurance plan/policy, fixed deposits etc. This makes it easier to withdraw in financial emergencies.

Plan Financial Risks With the Proper Insurance

Insurance is quite as important to financial planning as it is for financial well-being. Insurance protects your financial position if the unexpected happens, as such giving you peace of mind and security. There are various kinds of insurance life (to secure your income on death). Health to safeguard against serious illness or medical expenses. Also, property & casualty to cover for major losses like fire or theft. Insurance is the financial investment you need in gaining financial freedom.

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Track Your Financial Progress

It is very essential to track financial plans. This will help you in the progress towards achieving financial goals and also check if there has been any deviation from your financial plan. Thus tracking helps you to be on track of your present financial position versus future financial requirements. This also enables you to identify areas where there may be a need for change in the financial plan. Tracking takes time initially but saves a lot of time as compared with doing the same exercise after 5 years or longer.

It will also be best to keep paper records instead of depending on computer memory at all times. This will enable you always access financial information and financial planning from the comfort of your home. Financial planning is financial security, financial independence as well as financial freedom.

Give It Time

Achieving financial goals does not happen overnight it takes time. Financial progress is not a linear activity, there will definitely be ups and downs with occasional regressions. However, these are all part of the learning curve in the financial planning process. Thus patience is needed here if you want to achieve financial success. It will also help you stay focused on your financial plan by doing away with unwanted distractions like impulse buying.

Most people usually lose patience after a few months because they overestimate their income growth potential or underestimate cost escalations. Both are possible causes due to ignorance of financial requirements. As such it is better to start off slow until you get used to financial plan before. Financial Allocation is the process of dividing your financial plan into smaller actionable financial goals. Financial allocation will help you in achieving financial success.

Conclusion – Top 10 Keys To Financial Planning Success – Step by Step Guide

If you think engaging in financial planning is tedious and not worth it think about this. The days when emergencies pop up and you don’t have a backup plan will make you reconsider. Missing out on opportunities you should have taken advantage of if you had planned your finances well, can cause you a lifetime opportunity. As such, the need for financial planning cannot be over-emphasized, as it can rescue you from life’s unforeseen circumstances.


  • Christian Ehiedu

    I write for Educational, Financial, technology, and social media content producers. I am deep into doing credible research that will benefit you the reader. You can contact me on Tumblr, Chris Adam Facebook, Shopfortool Pinterest Account. I am a Technician and a woodworker. I have lots of years of experience in Technical work. I did some per time work at an electrical store. Having gathered lots of experience in the use of various tools link Mechanic Tools, Woodworking Tools, Power Tools, and Plumbing tools, I decided to put up this blog to help advise intending buyers or new biz on the right tools to buy on the market. My social Handle:

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