As a MoneyLetter reader, we trust you recognize the importance of spending time organizing and planning your financial future. To help enhance your planning acumen, this article is about how to apply some of our financial planning process to your life. We believe that the financial planning process can help most of us improve the odds of achieving our financial goals and that engaging in the process reduces money related stress. In some cases, the improvement in overall wellness justifies the process regardless of the financial impact on the outcome. We hope this brief discussion will help you apply some of these principles to your own circumstances.

What is important?

The first time we engage someone in the financial planning process, we start our conversation by talking about what you have on your mind. What are your concerns? What has been on your mind that motivated you to meet with us? As advisors, it’s critical we know what our clients are aiming for, so our recommendations have the most impact. 

We hear quite an array of answers to these questions. Many people think about having enough money for the future or making sure their kids are educated. Others talk about the things they want to do. And some talk about a specific thing like stock options or other investments they own. 

As a reader, we are trying to help you experience a moment of financial mindfulness where you take stock (pun intended) of what is important to you, how you want your future to be, and what your money needs to do to make it happen. As you, the reader, think about this, write your thoughts down. 

What’s in the way? 

With a better understanding of what needs to be accomplished, we move to the next question, “What are the obstacles here?” This step is about identifying the things that are in the way. As an advisor, we want to dive deeper and figure out what is reducing your chance of success. When someone comes to us and says that they want work to become optional, to travel, or write, or spend their time working pro-bono for a cause that’s important to them, they need our help and it’s usually because they: 

  • Recognize they don’t have all the tools or expertise (known unknowns). 
  • Have the expertise but lack the time to execute (or would rather spend the time elsewhere).
  • Know they need to do something but keep putting it off (analysis paralysis). 

Some people don’t want to manage their finances and decide to let someone else take care of it, but that’s less common. 

When you think about your answers to the question above, ask yourself: What is stopping me from achieving my desired outcome? Write these things down. 

A financial plan is a full picture of a person’s current financial situation, their financial goals and methods chosen to achieve them. Financial planning involves details about savings, cash flow, debt, insurance, investments, and any other elements of financial performance. It also includes the person’s long-term monetary goals and strategies. 

What’s next? 

At this point, we usually have a good idea about what a person wants to accomplish – and the obstacles standing in their way. It’s easy for the investor and planner to feel fired up about reaching goals and bulldozing roadblocks. The excitement of expected progress and assumed success collectively motivates us. But that feeling is temporary, and the next steps are critical. Part of the value of the planning process is reducing the amount of time and effort our clients must invest to reach their desired outcomes, so our work isn’t done yet. 

In a scheduled meeting we will share our experience as financial advisors and about the history of the firm. We’ll learn more about our potential investor’s finances, and we’ll explore how best to address some of the challenges that they face. 

If we are a good fit, we’ll offer them a follow-up meeting where we present a high-level review of their financial circumstances. This “Birdseye View” goes deeper into one’s finances and includes recommended next steps and identifies some of the pitfalls they might be running into. After that, we’ll decide if we want to formalize a relationship and start tackling some of the action items. 

You should look at your list of obstacles, then ask yourself two things: “What can I do about this?” “What am I willing to do about this?” Here you’ll find the underlying solutions, your first steps. Your answers should facilitate action. This is the good stuff, how we go from want, to execution, to achievement. 

By Russell Swinton 

Russell is a Financial Planning Consultant with Asset Strategy Advisors.