How to make a financial plan in three easy steps

Making a financial plan is essential to reaching your future and immediate lifestyle goals. After all, you would not take a road trip without first looking at the directions, so why would you try to reach your financial destination without a well-planned road map? 

If you are single, you can get started on a financial plan right this second. If you are married, we recommend that you make a financial plan with your spouse. Not only will this help create accountability for you both to reach your financial goals, but as an added benefit, it will reinforce that you are on the same team working toward a shared vision of the future. According to a recent study by Dave Ramsey, “94% of those with ‘great’ marriages discuss their money dreams together, compared to only 45% of those who say their marriage is ‘okay’ or ‘in crisis.’” Now, of course, we are not marriage counselors, but we have seen first-hand the benefit of working with someone toward your shared financial goals. 

Are you ready to build a road map to reach your future financial goals? Here is how to make a financial plan in three easy steps:

1. Identify your financial goals.  When you start out on a road trip, the first thing you do is punch in the destination address in your GPS. That is exactly where you start with your financial road map, too. You have to know where you want to end up before you can create a plan to get there. Here are a few questions to help you get started:

• Where do you see your life in five years? How about 10 or 20 years?
• Do you have any large purchases coming up, like a new home or new vehicles?
• What are your travel goals?
• Do you have children? Are you planning on paying for their college tuition or weddings?
• Do you plan to have children in the future?
• What does your retirement lifestyle look like?

One of the biggest areas where we see people fail in their financial planning is they think too long term. Yes, planning for retirement is essential, but you also have to live right now, and there is a healthy way to balance planning for your future financial goals without sacrificing your quality of life today. That is what financial planners at ProVise help people do. We assist with finding the happy balance between managing money wisely for the future while still building a lifestyle that is enjoyable today. 

2. Take inventory of your current financial status. This piece is huge. Where are you actually spending your money, and do you have a way to track each transaction against your overall goals? There are several simple software solutions available that can help you track your spending, and even come with an app on your phone so you can monitor your budget and cashflow in real time. We personally love YNAB (You Need A Budget), but there are several others available that you can check out. 

Before you can reach your goals, you need to see how much money you have every month and where each dollar is being allocated. You also need to monitor your monthly spending habits, i.e. how much are you spending in consumer shopping and entertainment? Where are some areas that you can cut back to reallocate money toward your goals without completely sacrificing your quality of life? Maybe designating an entertainment budget for the weekends and committing to eat at home during the week will free up several hundred dollars a month that can be used toward savings, debt reduction and investments. 

3. Determine what to save, invest and pay down debt. We recommend most people use a financial advisor for this piece of the game plan because there is not necessarily a right or wrong answer for how to allocate your budget to saving, investing and debt reduction. It is really about a skilled evaluation of where you are and where you are going. 

Think about this section like a fork in the road — you can opt to cut your budget down to the essentials and spend every extra dollar paying off debts, but where does that lost investment time leave you in regards to missing crucial years of potential compounding interest? At the same time, you do not want to invest all of your money without paying off debt because the faster you pay it off, the less interest you will pay over time and the more money you can allocate toward your financial goals. 

You can see why we recommend the skilled eyes of a financial advisor for this section. It is like trying to navigate rugged terrain at night with someone in the driver’s seat who has never driven on a mountain before. One wrong turn, and you could be in trouble. But with an experienced financial advisor in the driver’s seat, you can make sure you reach your destination without sacrificing your view on the way up. 

Taking the steps to make a financial plan is critical to your financial success, but you do not have to go it alone. Contact our team of CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group to help you navigate your financial goals. We will provide a personalized plan for you at a fiduciary standard of care and offer an unconditional money-back guarantee. If for any reason you are not satisfied with the written plan, simply return it to us and we will refund 100% of the fee paid.  Nothing to lose and everything to gain.

Once you are ready to work together, we will create an implementation strategy and establish a monitoring system that meets your needs. Contact our ProVise team to schedule a consultation today.