Creating a Personal Financial Plan: Step-by-Step Guide

Thứ bảy - 27/04/2024 01:09
From determining your financial goals to evaluating their feasibility, we've got you covered Financial plans are written, organized strategies for maintaining financial health and accomplishing financial goals. Developing a personal...
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Financial plans are written, organized strategies for maintaining financial health and accomplishing financial goals. Developing a personal financial plan will not only allow you to control your financial situation but can enhance your quality of life by reducing the uncertainty you feel about money-related issues and future needs. While you may opt to employ a professional financial planner, developing your financial plan is a perfectly feasible practice. Most financial planning experts recommend following a six-part process to develop a robust plan for the future of your finances.

Part 1
Part 1 of 6:

Determine Your Current Financial Situation

  1. Step 1 Develop a list of your current assets and liabilities.
    Assets are things you own that have value, while liabilities are the values of the things you owe.
    • Assets may include cash or cash equivalents, such as checking and savings accounts; personal property, including equity in a home and/or a car; and invested assets, including stocks, bonds, and pensions.
    • Liabilities might include current bills and debts such as car loans, home loans, medical debt, credit card debt, or student loans. See How to Get Out of Debt.
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Part 2
Part 2 of 6:

Develop Your Financial Goals

Write a Personal Financial Plan Step 6
  1. 1
    Use a "SMART" goal-setting process. Make sure your goals are Specific, Measurable, Attainable, Rewarding, and Time-based. Doing so will ensure your goals can move past the "dream" stage into actual implementation.[3]
    • Specific goals can be clearly articulated. A vague goal like "be financially independent" makes it impossible to succeed or fail. Have a concise and precise goal that you can turn into a short statement.
    • Measurable goals have some quantitative dimension to them, such as "Get my credit score to 750" or "Have $12,000 in emergency savings". Without assigning a value to a goal, it's also difficult to know if you're making progress.
    • Attainable goals are reality-based. Don't make a goal that you cannot realistically attain: this will only discourage you from having a plan at all.
    • Rewarding (also known as Relevant) goals feel good once you achieve them. There should be a positive feedback loop where you finish a goal and then want to finish more.
    • Time-based goals are not open-ended but have deadlines and milestones that you can fail or succeed at. Remember that plans are not set in stone and they can change as you have new information: if you fail at a certain milestone on the way to a goal, adjust that expectation and give it a new deadline.
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Part 3
Part 3 of 6:

Identify Alternative Courses of Action

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Part 4
Part 4 of 6:

Evaluate Your Alternatives

  1. Step 3 Research potential decisions like a scientist.
    Gather as much research as you can, and carefully evaluate your data. If you are considering an investment, for example, you should pay special attention to the correlation between risk and reward — how risky is the investment, and how much reward will you receive if it is successful? Are the benefits worth the risks?[7]
    Ara Oghoorian, CPA

    Ara Oghoorian, CPA

    Certified Financial Planner & Accountant
    Ara Oghoorian is a Certified Financial Accountant (CFA), Certified Financial Planner (CFP), a Certified Public Accountant (CPA), and the Founder of ACap Advisors & Accountants, a boutique wealth management and full-service accounting firm based in Los Angeles, California. With over 26 years of experience in the financial industry, Ara founded ACap Asset Management in 2009. He has previously worked with the Federal Reserve Bank of San Francisco, the U.S. Department of the Treasury, and the Ministry of Finance and Economy in the Republic of Armenia. Ara has a BS in Accounting and Finance from San Francisco State University, is a Commissioned Bank Examiner through the Federal Reserve Board of Governors, holds the Chartered Financial Analyst designation, is a Certified Financial Planner™ practitioner, has a Certified Public Accountant license, is an Enrolled Agent, and holds the Series 65 license.
    Ara Oghoorian, CPA
    Ara Oghoorian, CPA
    Certified Financial Planner & Accountant

    Our Expert Agrees: Evaluating risk is very important for financial planning. Ask yourself if a risky purchase's potential benefits are greater than the costs. You should do this for all financial decisions, from going out to eat for dinner to investing in the stock market.

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Part 5
Part 5 of 6:

Create and Implement your Financial Action Plan

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Part 6
Part 6 of 6:

Review and Revise Your Financial Plan

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  • Don't forget to account for 3 percent yearly inflation when calculating figures for your budget and projected expenses.[10]
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