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The Ultimate Financial Planning Process: Plan like a Pro!

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Created on
June 9, 2022


What’s Inside


Are you finding it hard to manage your finances? Do you feel your finances are all over the place? Does it get mentally taxing?
Don't worry! This 6-Step Financial Planning Process can be a true saviour.
It helped me. It might help you too.

Evaluate Your Current Financial Situation 

Just take some time to sit back and look closely at your financial commitments. Make a note of your:

  • Income - How much you earn every month.
  • Debt - Student loan, House loan, Personal loan, Credit card EMIs, etc.
  • Other spends - Rent, Food, Travel, etc.
  • Investments - Any existing investments' premium that you might have to pay

Even if you send money to your family every month or give your children pocket money, keep all such expenses on track.

That's it. Once you see the difference between your income and total spends, you'll be able to understand your current financial situation. If the difference is very minimal, don't worry! We've all been there. But sometimes, it's essential to take some time out and understand where we stand in our financial journey.

Determine Your Risk Profile 

Every person has a different risk appetite. Some people are very comfortable with taking risks, while others are not. Ask yourself which side you are on.
If you've got a bigger risk appetite, your investment portfolio will look different versus if you want to play it safe and have a very low risk appetite.

Plan your finances accordingly. But before that, identify and set your financial goals.

Set Financial Goals 

Once you evaluate your current financial situation and determine your risk profile, you can finally start setting your financial goals. You need to make sure these goals are realistic and honest. These goals can be broken into:

  • Short-term goals: Include creating a monthly budget, paying off your credit card, creating an emergency fund, paying rent, etc.
  • Medium-term goals: Include saving for your marriage, buying a new car, building an investment portfolio, etc.
  • Long-term goals: Long-term goals include things like buying your own house, saving enough money to retire, etc.

Have A Contingency 

We don't know what the future holds for us. We can be prone to financial hurdles and challenges. Even though you stick to a plan, things might not go alike. Let's say your old vehicle breaks down unexpectedly, and you have to buy a new one. Or you might suddenly lose your job to the recession. What will you do then?
There should always be a reserve fund or a backup fund. It is advisable to have 6 - 12 months' worth of expenses saved in an emergency fund in situations like these. These savings will give you enough time to get back on your feet.
We know it takes time. But it's never too late.

Implement Your Financial Plan

We all have a friend who makes a gym routine, a work routine, and a diet routine every week but fails miserably every time. A little effort is all it takes to turn a plan into action.
So, we suggest pushing yourself a little harder in order to walk towards financial success. Implementation is the key.
Time for some action now!

Review & Revise

Once you have put your plan into action, you should keep an eye on your progress. What may have been a sound investment yesterday may become null tomorrow. Your standard of living might change as you age. Factors like these make it important to revisit your financial plan and review it periodically. If you feel the need to revise a previous strategy, go ahead and make the necessary changes.


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Frequently Asked Questions

1. What are the six steps in the financial planning process?

Step 1: Evaluate and determine your current financial situation

Step 2: Evaluate your risk profile

Step 3: Draw your short, medium & long-term financial goals.

Step 4: Set up a backup fund in case of an emergency

Step 5: Execute your financial plan

Step 6: Periodically reviewing your current plan and make necessary revisions.

2. What is financial planning?

Financial planning is creating a vision for your financial future and following through on it. The financial planning process is evaluating your net worth and risk profile, setting short to long-term financial goals, and revising your goals over time, if necessary. It also involves strategies on how to retire without having to worry about finances and securing your family’s future.

3. What is the first stage of the financial life cycle?

The first stage in the financial life cycle is the accumulation of wealth over time. This is the stage where you just begin working and are early in your career. In this stage, you do not generally have any family or friends that depend on you to work. People in this stage of the financial life cycle may or may not have outstanding debt. 

This stage is where you should try to pay off your debt and start planning for your financial future. It is wise to start saving and investing as early as possible.

4. What are the stages of the financial life cycle?

The financial life cycle has four stages.

Stage 1: Early career - Begin accumulating wealth and paying off debts

Stage 2: Mid-career - Managing wealth and investing

Stage 3: Late career - Retirement planning 

Stage 4: Retirement- Planning your wealth distribution and family security


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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