5 Steps To Develop Your Financial Plan

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Step 1: Define your financial objectives and goals

The goals and objectives will be the guide to the financial plan and should provide a roadmap for your financial future.

Goal:

Quantifiable and achievable
Clear and have a defined timeframe
Separate your needs from your wants

Step 2 – Gathering your financial and personal information

The financial planning process and its success will depend on the quality and clarity of the information.

This includes:

Income and expenditure
Assets and liabilities
Risk attitude, tolerance, and capacity

Step 3 – Analysing your financial and personal information

Analyze the information that you gathered during step 2

This includes:

Solvency Ratio
Savings Ratio
Liquidity Ratio
Debt Service Ratio

Step 4 – Development of the financial plan

Your financial plan will be developed based on the information gathered during step 2 & 3

This includes:

Net Worth Statement (a balance sheet)
Annual consolidated tax calculation
Annual cash flow report (displaying surplus or deficit)

Step 5: Implement and review your financial plan

Once the financial plan is developed then implement and review it.

This will include:

A new pension or investment strategy
Changing debt provider
Additional life or serious illness insurance
Income and expenditure adjustments

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