Hello and welcome back to our financial literacy series on financial planning. In the last post I summarized some of the reasons why people don’t have a financial plan. We also provided stats on some of the very positive results for those who do, such as helping to reduce stress and creating a sense of confidence and control in the face of uncertainty. Who wouldn’t want less stress in life?
Today I’m going to pull back the curtain on the “mystery” that seems to surround both financial planning and what financial planners can do to help. I’ll outline the process in simple terms, with the hope that it will eliminate one of the biggest hurdles to just getting started.
Earl Nightingale in his classic recording – The Strangest Secret gives a definition of success that I believe is a great analogy for financial planning.
Earl says - “Success is the progressive realization of a worthy ideal”, meaning that if you have something worth having or doing in life, you will be successful as you progress through the steps of reaching that “worthy ideal”
Building on that theme, financial planning could be thought of as “the progressive realization, of a worthy life goal, that involves money”. This could be any financial goal (at any age) – buying a home, paying off a home, being able to retire when & how you want, paying for your children’s education, or taking that dream vacation.
The key to this definition is found in the words “progressive realization”. Planning is a process, not an event and it takes time. Here in my hometown of Peterborough there is the world-famous Lift Locks, which took 8 years to build between 1896 and 1904. Much like this engineering wonder, that followed many key steps from initial idea, to design, engineering and then construction, a financial plan is created by following a proven process with 6 specific steps.
As one progresses through these planning steps, they come to realize what they must do to retire early, pay off the house, or take the whole family on a dream vacation.
The 6 Steps Outlined
Here are the 6 Steps to the process. In future posts I’ll go into detail for each one of the steps.
- Step #1: Meeting the Right Financial Planner™ - You must find the right kind of planner for your specific needs and set the ground rules!
- Step #2: Discover Your Lifestyle and Financial DNA™ - Determine where you are today financially, what’s your vision for the future and what will it all cost?
- Step #3: The Financial Diagnosis™ - Determine the financial gap to achieving your vision by identifying the obstacles!
- Step #4: The Financial Prescription™ - A Blueprint (plan) is developed to overcome the obstacles and help your vision become reality!
- Step #5: Filling the Financial Prescription™ - A plan is only as good as the actions you take to put it in place! Implementing the recommended strategies is key!
- Step #6: Your Regular Financial Fitness Review™ - Financial planning is a process not an event and as life happens, you must review and update your plan regularly!
Until next time, remember ……..Without a Plan – It’s Only Money!
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Additional Resources:
If you would like additional detail on these steps, or the broader financial planning process, check out our future posts in this series. Or you can e-mail me at info@truenorthretirement.ca and ask for our The Fearless Retirement Blueprint.
Also, you can visit the FP Canada website for the Canadian public at: https://financialplanningforcanadians.ca
