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Financial planning is the process of organizing and systematizing one’s approach to spending money. If financial planning is to be successful, it is necessary for the planning itself to be organized and systematic. Financial planning allows for the organized and systematic character of the planning to be imparted to the fiduciary reality. If, however, the planning is disorganized and unsystematic, it will be impossible for it to impart any meaningful organization and systematization to the fiduciary reality. 

In the following, we’ll review a few steps toward organizing and systematizing your financial planning.

  1. Recognizing the client’s personal and financial situation: Every individual is surrounded by circumstances beyond their control. Understanding these circumstances can help you to define your financial activity in an organized and systematic way.
  2. Identifying and selecting goals: Every person is subject to desires, of which money is the bodily manifestation. The specific desires and ambitions of your client should be used to organize your vision of the future.
  3. Analyzing the client’s present strategy and prospective alternative strategy(s):  “Strategy” is a military term. It refers to the marshaling of disparate forces over time to achieve a single objective. 
  4. Prepare financial planning advice: Keep all of the above in mind, and look into the future. Then, decide the course of action that your client should take.
  5. Present financial planning advice: Tell your client what should be done. Be convincing.
  6. Put the financial planning advice into action: The systematization and organization of the planning you’ve prepared will now be imparted to the fiduciary world. This is by means of the actions your client takes based on your advice.
  7. Monitor and update progress: The imparting into the real world of the systematization and organization with which you have informed your planning will take time. Given the obscurity of the future and the ever-shifting circumstances of the present, modifications may need to be made.

1. Recognizing the client’s personal and financial situation.

“Situation” is derived from the Latin “situs”, which means “place”. Every object in the world has a place, which is defined by these objects’ relations to all other objects. If there were only one object, it would have no “situation”, since it would not exist in relation to other objects. Thus, it would not be an object, since every object has a place. In this way, the very being of every object qua object is bound up with the existence of every other object. The same is true of financial situations, which means you’ll need to take as wide a view as possible of your client’s position relative to other financial realities.

2. Identifying and selecting goals.

“Goal” is synonymous with “desire”. Money is the physical manifestation of desire. Desire necessarily refers to the future, since the thing desired is absent in the present. Money is thus the physical manifestation of the future in the present. Awareness of this will help you to systematize and organize your client’s use of money. 

3. Analyzing the client’s present strategy and prospective alternative strategy(s).

“Strategy” is derived from the Greek word στρατηγός “a general (of an army)”, which is itself from the word στρατός “army”. Think of your client’s money like an army. Every cent is a soldier. Outlays are heroic martyrs. Bankruptcy is the capital city ruined and set to flame, streets littered with the bodies of innocents sacrificed to Mars and Pluto. Thinking in this way will help you to systematize and organize your client’s finances toward the goals you laid out in step 2, above.

4. Making a financial planning advice

With all of this in mind, prepare your advice. Keep the client’s goals in mind. Take the simplest possible approach to realize these goals. Minimize risk. Maximize returns.

5. Presenting the financial planning advice

In this important step, you will need to convince your client that your plan is the best way forward. Prepare a detailed presentation. Outline the ways in which your plan will meet your client’s goals. Assuage any fears for the future by showing how your plan minimizes risk. Provide encouragement that your plan will result in success. 

6. Putting the financial planning advice into action

In this step, you or your client will apply the advice you have prepared in the real world. This may include a variety of actions over time. Wasteful spending should be limited. Sound investments should be made. Substantial savings should be set aside.

7. Monitoring and updating progress

The plans you have made will show their effects as time goes on. The investments you’ve selected will bring returns, or show losses. The money-saving approaches you’ve suggested will have a greater or lesser effect. The savings programs you’ve proposed will have varying degrees of success. Check up periodically that everything is going to plan.

What is Financial Planning?

Financial planning is the organization and systematization of financial activity. Financial planning relates to three fundamental operations. The first of these operations is the prevention of unnecessary losses. The second of these operations is the prudential saving of money. The third of these operations is the profitable investment of money.

See the related article on Financial Planning.

 What is the Importance of Financial Planning?

The importance of financial planning is similarly threefold. First, it prevents monetary losses. Second, it allows for money to be saved. Thirdly, it allows for profits to be made on the money that has been saved. This allows for financial goals to be met. Retirement is an example of a financial goal that can be met by means of careful financial planning.

Which is the most Important Step in Financial Planning?

The most important step in financial planning is the application of the plan to real life. Many goals and aspirations may be made in the imagination. Many resolutions to save money and stop spending on frivolous expenditures may be decided upon. Many investment opportunities may be researched. Yet none of these dreams matter in the slightest if discipline is not applied to one’s actual financial activity.

What are the Components of Good Financial Planning?

The components of financial planning are as follows.

  • Financial Goals: Having realistic goals helps to order one’s financial activity. These are the foundation upon which the rest of the plan rests.
  • Situational Awareness: Every person’s environment shapes the possibilities of their action. Financial planning must take into account the situation of the investor from the broadest levels to the most particular details. 
  • Determination To Apply The Plan: All sorts of ideas and resolutions may be made concerning one’s finances. These will only have a beneficial effect if they are applied in real life. 

See the related article Components of Good Financial Planning.

What is an example of a Financial Plan?

First, determine the goals. An example of this is retirement. Then, analyze the financial situation. For instance, your client might be a 39-year-old teacher. Prepare and present the plan. Once the plan is put into action, check that progress is being made.

Is Financial Planning Necessary?

Yes, financial planning is necessary. If proper financial planning is not carried out, the disorder will reign in the financial realm. This disorder will result in financial destruction. This destruction may be sudden and catastrophic, or it may resemble a slow drain of energy that vitiates financial life. On the other hand, proper planning success will tend to produce worldly felicity and financial glory.