How to Do a Financial Plan…The Right Way

Good morning Dinks.  Let me ask you a question, do you have a financial plan.  Or actually here’s a better question do you know how to do a financial plan?  The odds are your answer is no.  And that’s O.K.

Many people go through life without a financial plan and that’s O.K. too.  There’s no rule book that says everyone and their mother has to have a financial plan.  It’s not necessary but it does make achieving your goals a lot easier.

I’m a firm believer in planning – everything.  I like to have a clear idea of what I’m doing for everything from my daily tasks to how I fill my days on vacation.  Almost everything in my life is planned, well at least as much as it can be.

Maybe you have goals, but you’ve never thought of creating a plan to help achieve them.  Maybe you’re the type of person who likes the idea of goals and hopes to achieve them some day but don’t really work towards them actively.  There’s nothing wrong with that.  However I can speak from experience when I say that setting a plan to achieve your personal and financial goals makes them happen a lot faster.

Set your goals

This is How To Do a Financial Plan 101.  Before you can start planning towards achieving your goals you have to actually set them.  Think about what you want to achieve over the next two, five and ten years.  These goals can be anything from going to graduate school, taking a fabulous vacation or buying a house.

Over the next two years I want to spend two weeks in Europe travelling through Portugal, Italy and Greece.  Over the next five years I think Nick and I want to buy a house and over the next ten years I have absolutely no idea what I want to achieve.  But as it gets closer I’m sure I’ll figure it out.

Set priorities

This is the second step towards starting a financial plan.  You may have more than one goal for each time period and that means you have to set priorities.  If not then the priority defaults to the closest time frame.

Start saving

Think about how goals fit into your life and your budget.  Once you know what your goals are and when you want to achieve them by you can start setting up automatic savings.   I like to have separate accounts for all my goals because it lets me track my savings as well as the performance of investments.  When I merge goals into one account lines get blurred and I don’t like it.

Make it happen

IF this is the first time you’ve set a plan to really work towards achieving your goals you will most likely have to make changes in your daily habits.  You’ll start thinking about your goals, check in on the progress and possibly cut some spending to afford your savings.

That’s it.  Welcome to your first financial plan.

Kristina Tahnyak

Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.