What are the steps of goal-based financial planning?

What are the steps of goal-based financial planning?

Depending on the investment strategy and the correct financial advice for a goal-based financial planning, one can determine the best way to live peacefully both in the present and the future. Most people spend days to understand

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5 steps of goal-based financial planning There are in total 5 steps for setting up a goal-based financial planning.

1. Knowing one’s stand: Nobody can start planning if he /she is not aware about one’s own financial condition. Goal-based financial planning includes all the incomes, expenditure and debts of the individual. Thus the first step should be to take out some time and list all the assets owned by the individual and then separate them categorically – assets, debts, expenses. The debs can then be subtracted from the assets to know about

the net worth. This way, one will get a clearer insight regarding the cash flow and serve to create a better financial planning.

2. Setting up goal: The ultimate motto for such planning is to set a goal.

This goal should be in preference to the financial situation of the individual and should reflect where the individual wants to see oneself in the future. For this, one can realize the importance of certain financial goals and also take help of the personal financial planning tools for a smoother experience.

3. Planning for the future: Financial planning does not only talk about the present, it also talks about where the individual would like to see him/her in the future. This is the third, and among the most vital steps of financial planning. When the individual thinks of a goal, he/she will also have to think of the ways that will help in reaching the goal. Even in such cases, the personal financial tools come in handy.

4. Managing money: For short-term goals, one can start by saving small amounts of money and clearing off the debts. But, is this enough for long-term goals? No. The long-term goals will have to follow the investment procedure and evaluate the time frame, risk tolerance and tax implications.

5. Reviewing the whole plan again: After the plan is all set up, the individual must go through each of the steps again to check if they are on track and are able to save money. Always re-check the risk tolerance and whether the expected returns are being received or not.

The system of goal-based financial planning follows a defined process and can benefit individual into gaining high profit. This planning may not ensure security and wealth but should provide an opportunity to properly analyze and expertise the whole system.