Series: Stages of the financial planning journey

The Overview

When it comes to financial planning there are many different approaches that can be followed and I truly do believe that each person’s financial journey is unique. However, there are certain guidelines that I think should be followed in order to get the most out of your financial journey and to ensure that you are making progress and moving forward rather than just getting stuck in a rut or moving in circles.

I do think that having a plan of action from the beginning will make a big difference to whether you achieve your financial goals or not. I understand that for some people the thought of having to take a good look at your financial situation is very daunting, but I promise you that once you have achieved your first financial goal, you will want to keep going.

In this series of blog posts I will be discussing an overview of a financial planning process (this article) followed by a detailed description of each step in the process (in the upcoming articles). Like I mentioned previously, there are many different approaches but this is the one I prefer.

It is important to note that this is not a “quick fix” for your finances and the process is more cyclical than linear meaning that you will most likely revisit most of the steps as life happens and things change. I like to see this process as a journey that you are embarking on which should evoke a sense of excitement.

With all that being said, let’s get started. The process is as follows:

  1. Take stock of where you are. What is your starting point?

To be honest, I think for most people this is actually the most difficult and generally least rewarding step in this journey. If you aren’t someone that has been keeping tabs on your spending habits or debt balances then doing this can be quite eye-opening. You may come to the realisation that you actually don’t know where your money has been going to every month or even how you make it to the end of the month. 

Unfortunately, this has to be the first step as you won’t know how to plan your journey if you don’t know where you are starting from. Luckily once this step is over, the rest of the journey can be quite fun and very rewarding if you have the right outlook.

  • Establish your goals and objectives. Where are you going?

This is my favourite part of financial planning – dreaming about where you would like to end up. This is your opportunity to dream BIG. Don’t hold back. Write these dreams down somewhere so that you can refer back and tick them off as you achieve them. If you would like to get creative with it by creating a vision board then go ahead. Get your partner or spouse or kids involved and dream together.

These dreams and goals can be seen as pitstops along your journey to your final destination. I think it is so important to have dreams and goals of all different sizes and with a variety of timeframes – this keeps your journey interesting and gives you the opportunity to “refuel” along the way.

  • Make plans to increase your cash flow margin. How can you get to your destination the quickest?

Now that you know what your starting point is and where you are heading, you need to plan your route. What is the fastest way to get from where you are to where you would like to be?

Your cash flow margin is the difference between your income and expenses. There are 2 ways to increase this difference, first is by decreasing your expenses and the second way is by increasing your income. The ideal route to follow would be to do both. The quicker you increase this margin, the quicker you will reach your goals as your margin is what allows you to do that.

  • Control your cash flow. Stick to your planned route.

We have arrived at the final step. We have a starting point, a destination and a mapped-out route so all that’s left is hitting the road and sticking to the route. I know that that is easier said than done as life will most likely throw some obstacles in your way. When you get to a road block, don’t stop your journey, just revisit your initial plan and add a detour.

Start at step one: where am I now? Then look at step 2: is my destination still the same or would I like to add a different pitstop along the way? Step 3: what does my new route look like? And then hit the road again.

I hope that this quick overview has helped you to start thinking differently about your financial journey and the process involved. Read our next article in this series to find out exactly how to determine what your starting point is.

Picture of Tamlyn N

Tamlyn N

Financial Coach & Business Advisor

LE Consult Group