Whether there’s an unexpected change in your circumstances, or you’re beginning to plan for future endeavours, there are many aspects to consider when building your financial plan.
This is why handling your finances and creating thorough financial plans can be a potentially tricky task.
However, there are a few things you can do to help make the journey much smoother.
Read on, to find our step-by-step guide for building your financial plan.
1. Seek financial advice
Arguably the most crucial step towards building your financial plan is to seek financial advice from a professional.
No matter the reasons why you’re devising your plan, or what you want to achieve financially, an expert adviser is key to optimising every area.
If you come with your needs and requirements surrounding your finances, your adviser – who’s proficiently experienced with these dealings – will be able to give you peace of mind and assurance in the plan you create together, providing appropriate information and guidance.
More importantly, they can give tailored advice that’s beneficial for your unique financial circumstances, so you have the best plan for you!
There’s a reason this is step one, since everything that follows in your financial journey is improved with an expert financial adviser.
2. Establish your short and long-term goals
Another vital step in building your financial plan, is setting the goals you want to achieve for the future, both short and long-term.
The core purpose of a financial plan is to improve how you manage your finances in order to reach a particular goal(s).
Every individual will have their own unique goals, and this is again why an adviser is key.
They can enable you to set goals which not only align with your initial vision for your financial future, but are also deemed achievable and realistic after review.
For example, a prime goal of yours might be to plan effectively for your retirement. With many important retirement considerations, such as your desired retirement age, lifestyle, and pension pot amount, you need to ensure you’ve covered every aspect of what you goal entails – including its achievability.
Once you have your goals clearly defined, you can then begin to devise the right approach for reaching them.
3. Structure your investments accordingly
Structuring your investments and contributions according to your established goals is also a key step in building your financial plan.
After you’ve set out where you want to be financially in the future, you now need to devise the right approach to get there.
If we take the above example, you’ll need to plan how you’ll achieve your dream retirement, and factor in all that could influence the likelihood and time frame of your goal.
For instance, you’ll need to ensure you’re making the right pension contributions monthly or annually, so you have enough to sustain the retirement lifestyle you want.
Also, with the amounts and frequencies you can realisticallycontribute, does your desired retirement age seem achievable?
This will also be something your adviser can offer thoughtful insight into, and help you lay out the best steps for re-structuring your investments, so you can achieve your goals as efficiently as possible.
4. Apply continuous monitoring and evaluation
A pivotal step in building your financial plan, which should certainly not be overlooked, is the continuous monitoring and evaluating of your plan.
Once you’ve established your goals and how you’re going to achieve them, you can begin putting your plan into action. However, as with all things financial, there’s always the possibility of the unexpected.
This can be things which could impact your financial circumstances – such as career changes or inflation ratefluctuations – to simple alterations of your financial vision, for example, changing what you want for your retirement, or having to now include a partner in your plan.
Therefore, you need to ensure every step of the way, you’re able to adjust your plan to accommodate for any new changes.
This is also why it can be beneficial to not only gain one-off advice from your adviser, but continuous guidance on the matter.
You can discuss and review any new changes which arise, and create the best plan moving forward, to help you achieve what you want at each stage in your financial journey.
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Please note, the value of your investments can go down as well as up.
