Steps to Starting a Financial Plan

A financial plan is an evaluation of your current financial state in order to outline how best to meet your financial goals, both present and future.  If you’re not sure how to begin with financial planning, not to worry. Starting financial planning is much easier than you may realize.

There are some keys steps to follow in designing a financial plan to ensure that you are successful and that your desired outcomes are achieved.

1. Begin a Relationship with a Certified Financial Planner or CFP.

A CFP has met education, examination, and ethics requirements.  They are issued a certification that distinguishes them as having specific credentials other than financial advisors.  Your CFP will detail their services for you, and explain the responsibility you will have in the process.  You can discuss payment for their services and the desired length of your relationship as well.

2. Define Your Current Financial State

You will need to organize all of your existing financial documents and present them to your CFP.  Together you will examine what your existing needs are.  Through careful analysis you will create the starting line of your plan.  Financial documents needed in this process may include tax returns, utility bills and other expense statements.

3. Identify Your Future Goals

You and your CFP won’t get very far from the start of your plan without identifying your overall financial goals and future needs.  Now is the time to look beyond current expenses.  You will need to consider such costs as college and retirement planning.  You may also want to share recreational desires that  may include vacations or acquiring a second home.

4. Discuss Your CFP’s Recommendations

After careful analysis of your financial documents and consideration of your goals, a CFP can start recommending products or services that will help jumpstart your plan and keep it rolling.  A clear budget will be defined.  Investment options in stocks and mutual funds may be presented.  Life insurance and retirement accounts will be detailed.

5. Decide a Course of Action

You may choose to carry out your plan independently or with the help of your CFP.  Your CFP can coordinate your plan with the help of stockbrokers, attorneys, and insurance professionals.

Starting a financial plan is really the beginning of understanding why money is important to you. Through this process, you may become clearer about your current financial situation and about how your money can support you into your future.


Tyler Landes

Tyler Landes is the founder of Tandem Financial Guidance, a fee-only financial planning firm in Kansas City, Missouri.

Tyler and I became friends through NAPFA and I asked him to write some thoughts on starting a financial plan as a guest topic for this