First Step In Financial Planning? What Steps To Follow After

Let us help you with the first step to financial planning
First step in Financial Planning
Article Overview

Financial planning is a method of putting your finances in order so as to better protect your future and that of your dependents. A financial plan gives you a sense of financial security that allows you to spend rightly and save adequately. It also helps you take care of your debts in a structured way that will prevent them from choking you. The very first step to take in financial planning which is usually overlooked is to decide that you need one. After deciding that you want to set up a financial plan to help monitor your present and future finances, you can then engage the services of a reliable financial advisor to help you with a preferred structure. Find the 10 key components to financial planning to help you build out your process fully.

‍This article will talk about the various steps involved in having a practicable financial plan that will secure your future and that of your dependents. Having a financial plan will enable you to have control over your income, expenses, and investments to achieve your financial and life goals. From the moment you decide to have a financial plan, the first step is to assess your financial position so as to know where to start from. You determine your current income, and future possible income, with your daily and monthly expenses. You will also need to assess your debt situation to know your obligations. After the assessment, there are subsequent steps that you may need to take to ensure your financial plan takes root. Some of the other steps that will be discussed include developing financial goals, a budget, and a plan to service your debts.

First Step In Financial Planning?

We all make hundreds of decisions every day, some with reasons and some without reasons but all decisions we make have both short and long-term consequences on our future. This is why having a financial plan is considered one of the most prudent decisions you will ever make. It will help you monitor your finances and secure your future. As it is with other things, a future position, there must be an analysis of a current situation. When it comes to wealth management and financial planning, the very first step financial advisors encourage is the analysis of your current financial situation.

Analyzing Your Financial Situation

This step of the financial planning process is the first and comprehensive view of where you are financial, considering your income, expenses, savings, investments, debts, and taxes. In analyzing your current financial position, you will have to prepare a list of your current assets, debt balances, interest rates, your daily, weekly, and monthly expenses. This will give you a foundation for workable financial planning.

‍It is advisable to engage the services of a professional financial planner that will collate all your financial documents to determine your current financial position and help you design a structure that will require that you make some changes in your financial lifestyle.

During this stage, some questions will be asked which will bother on your lifestyle goals, financial goals, risk tolerance, and credit card transaction. After getting the much needed information and determining your current financial position, changes may be made to your financial structure mostly in your expenses, savings, and investments. These changes will be in line with your desired financial goals which will probably be your next step in the financial planning process. Once a review of your financial position is complete, it will be easier to proceed to the next steps of your financial plan.

What Is The First Step In Financial Planning For A Baby?

For most, having a baby is desirable, and having a good financial plan alongside will go a long way in securing the future of your child. It is advisable to start your baby’s financial planning as soon as you realize your baby is on the way.

‍Whether you decide on time before birth or immediately after birth that you want to have a financial plan for your baby the first thing to do is to update your financial plan to accommodate your baby’s arrival. Most importantly your monthly budget. Once a baby is in the picture, you may need to review your monthly budget to accommodate the baby’s needs. Most people underestimate the expenses that follow the arrival of a new baby, therefore the adjustment you make may be a significant one, especially for first-timers who have to buy new baby needs such as cribs, swings, toys, and car seats. You have to create room for expenses such as diapers, infant medicines and food, and visits to the pediatrician. Having a financial plan for your baby is the first step of good parenting.

What Are The Next Steps Once You Analyze Your Financial Position?

After you must have analyzed your current financial situation, there are other steps you will need to take to put your financial plan in good shape. Some of these steps include:

1. Identify Your Financial Goals

Once you have reviewed your financial position and you know what your financial strengths and weaknesses are, the next step is to develop your financial goals. Your financial goals will serve as a roadmap to your financial future. You can divide your goals into short-term, medium-term, and long-term goals. It helps you differentiate your needs from your wants. Your financial goals must be reviewed regularly to capture any change in your financial situation.

2. Developing a Strategy For Your Financial Plan

This step enables you to come up with savings and investment plans that will help you improve your financial situation and attain your financial goals. You can design how your money will be spent on things like savings, investments, and bills. The financial strategy will also create a road map on how to increase your income, either through job-hopping, side hustles, and a salary raise. Having a strategy also brings other areas of your financials to the fore. It will help you consider areas like estate planning and insurance. This will also help you strategize on the type of investments that will grow your savings into what will protect your financial future. Your investment strategy will depend on things like your personal needs, risk tolerance, and financial goals

3. Engage The Services Of A Financial Advisor

A professional advisor is quite necessary when it comes to financial planning, especially if you have complex financial needs. A financial advisor will guide you in putting your financial plan in place. He may also introduce you to a network of other professionals such as a tax lawyer, an insurance specialist, and investment advisors, that you may need to implement your financial plan. A financial advisor will review your financial plan and his expertise will help straighten any grey areas in your plan.

4. Evaluate Your Strategy

Having come up with a financial plan strategy, it is easy to lose track of some of your needs and strategies. There might also be a couple of strategies that may not fit into your financial goals together. Evaluating your strategies will help you identify any loopholes in your financial strategies and plans. This is the time to discuss with your spouse, attorney, and your investment house to ensure everyone is on the same page. This is also where your financial advisor evaluates your proposed strategy and ensures it aligns with your risk appetite and goal. He may also make his recommendations which you should consider.

5. Risk Evaluation

This is also another important step in financial planning which may make or mar the success of your plan. There are inherent risks in every financial plan and it is important to evaluate each risk and decide whether it is worth taking on. For example, you may have a plan to sacrifice further studies for work in order to earn more income. While this may be a good plan in the short term, it may become a problem in the long term because you may not be able to advance in your career due to your limited education. These are the types of risks that must be evaluated before implementing your financial plan. Another important risk that should be evaluated alongside your planning includes your investment risks. This is what will determine how your savings will grow.

6. Implementing Your Financial Plan

After so much work has been put into the planning stages, the implementation stage is one of the most challenging stages of financial planning. This is the stage where you chart different courses of action for the success of your financial plan. At this stage, you have to make hay while the sun shines by implementing every decision as and when due. For easy implementation, you can create a budget calendar for your expense to ensure that you are not ahead of your budget at every specific period, set dates and reminders to complete some financial tasks, and implement decisions. You need to have your financial advisor on speed dial at this stage because his recommendations, guidance, and network will come in very handy. He may also handle interaction with financial product providers on your behalf.

7. Monitor and Update Your Progress

This is a very important stage because it is what will ensure the sustainability of your financial plan. You must continue to monitor and update your financial plan until you meet every goal in your plan. As you progress through the different phases of your life, your priorities and situations may change which may require some tweak in your financial plan. Periodic monitoring and update of your financial plan will help you adjust your financial plan to reflect your current situation. It will also help you to prioritize your financial decisions and make necessary adjustments that will align your financial needs and goals with your current life and financial situation.


The 5 steps of financial planning are 1. Organizing your budget, 2. Creating an emergency fund, 3. Building your investment portfolio, 4. Managing risk, and 5. Review and monitor your financial plan. 

The 7 steps in the financial planning process are 1. Reaching out to a financial expert, 2. Discussing your financial and life goals, 3. Create a budget, 4. Create an emergency fund, 5. Build an investment portfolio, 6. Managing risk, and 7. Review and monitor the financial plan. 

The 4 steps in financial planning are 1. Budgeting, 2. Saving, 3. Investing, and 4. Reviewing. 

Article Overview

Find The Right Advisor For Your goals

Is someone looking after your money?

RightFit curates the best financial advisors out there and connects you with them so that you have the right money managers in your corner.

Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

Related Articles

What is a locked in RSP
  • Investment ·

What Is A Locked-In RSP?

The Registered Retirement Savings Plan (RRSP) is a popular choice for many Canadians who’re saving for their future. Other than regular RRSP, you may have…
Want To Become A millionaire?

5 Ways of Thinking That Will Make You a Millionaire!

Discover the proven strategies that have helped hundreds of individuals achieve millionaire status. In it, you will find the five mindsets that can catapult you to millionaire status and unlock the secrets that can revolutionize your financial journey.