The five steps of financial planning

Financial planning is the process of making decisions about your money, and there are five steps to financial planning with which a financial planning advisor can help you.

The generous nature of Chester people and businesses is easy to see, as they support many local charities. An example of this can be seen this month with Chester store Easy Bathrooms, which is giving 5% of its November profits to the Miles of Smiles charity. The money will be used to fund a Disney Paris trip for terminally ill, sick and disabled children.

Many people would like to donate more but are short of money. With careful financial planning, wealth can grow so that you can enjoy a higher standard of living and be able to spare more of your wealth without feeling financial pressure.

Step 1 – Your goals

Step 1 of financial planning is to clearly identify your financial goals. These will be short-, medium- and long-term goals. Short-term goals can include providing an ongoing income from investments, whilst long-term goals can be achieved through pensions and retirement income.

Step 2 – The current financial situation

A detailed list of all assets and liabilities provides a snapshot of your current financial situation, but remember that property can be both an asset and a liability if there remains an unpaid mortgage.

Your current salary is an asset, as well as any business assets you own and business profits. A careful look at your current financial situation will show you how near your short-term goals are.

Step 3 – The plan

Your financial plan takes you from where you are to where you want to be in both the short-term and immediate future. Your plan will include investment and savings strategies.

Your investment choices will also be subject to the amount of risk that you are happy with, while tax planning makes sure that you do not pay more tax than you need to. You could also look into your spending habits and how to save money by cutting down on your expenses.

A large part of the plan focusses on how to grow your wealth, but you also need to look at wealth protection. This will include insurance, such as life insurance, sickness insurance and mortgage protection. For wealthy individuals, a family trust can be used to protect assets.

You plan should include what happens after you die, how your wealth will be passed on to your dependents and inheritance tax issues.

Step 4 – Implement your plan

This is an obvious step – putting your plan into action.

Step 5 – Monitor and review

Remember that your financial plan is not fixed. At least once a year, review your plan, and if necessary adjust it.

Your salary may have increased, you may have inherited some money, or your business may be earning more than expected. These are all reasons to adjust your plan, investing more of your income to provide a better financial situation in the future.

Endeavour Financial Planning can help you with all five steps. Talk to one of our financial experts to discuss how financial planning can protect and grow your wealth.

Trusts and Taxation advice are not regulated by the Financial Conduct Authority.

Investments – The value of units can fall as well as rise, and you may not get back all your original investment

Posted by Mark
23rd November 2017


All blogs and news on Endeavour Financial Planning are for information purposes only and are not intended to provide advice. Please seek the advice of a financial advisor before making any financial decisions.

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