Question: What Are The Five Fundamental Steps In The Financial Planning Process?

What are the steps in the financial planning process?

The financial planning process is a logical, six-step procedure:(1) determining your current financial situation.(2) developing financial goals.(3) identifying alternative courses of action.(4) evaluating alternatives.(5) creating and implementing a financial action plan, and.(6) reevaluating and revising the plan..

What is the most important step in financial planning?

Monitoring Your Financial Progress. Regular communication and follow-up are important steps in the financial planning process. In fact, creating the plan is really just the first step. You’ll have ongoing contact with your planner to find out whether you are on track to meet your financial goals.

What is a financial action plan?

A financial action plan is a plan that directs how you will manage your money in order to make progress toward your goals. Simply knowing what you want will not get you there: you need a real plan to make it happen. And it should be written down, with clear goals and actionable steps that can be measured in some way.

What are the 5 components of a financial plan?

Essential Components to a Financial PlanGoals & Objectives: Goals and objectives should be listed by priority and should be as specific as possible. … Income Tax Planning: … Balance Sheet: … Issues & Problems: … Risk Management and Insurance: … Retirement, Education, and Special Needs: … Cash Flow Statement: … Investment Planning:More items…

What are the six steps in developing a financial plan quizlet?

Terms in this set (6)step 1: determine your current financial situation. … step 2: develop your financial goals. … step 3: Identify Alternative Courses of Action. … step 4: evaluate your alternatives. … step 5: create and use your financial plan of action. … step 6: review and revise plan.

What are the 7 key components of financial planning?

The 7 Elements of a Financial PlanRetirement plans.Investment management.Social Security Planning.Risk Management.Tax Planning.Estate Planning.Cash flow and budgeting.

What are the six steps in the planning process?

The six steps are:Step 1 – Identifying problems and opportunities.Step 2 – Inventorying and forecasting conditions.Step 3 – Formulating alternative plans.Step 4 – Evaluating alternative plans.Step 5 – Comparing alternative plans.Step 6 – Selecting a plan.

What is the first step in a long term financial plan?

Terms in this set (20) The first step of financial planning is to determine your current financial status. A new car is an example of a need. Saving money for the holidays is an example of a long-term goal.

What is the most important step in financial planning quizlet?

The five steps in the financial planning process​ are: evaluate your financial​ health, define your financial​ goals, develop a plan of​ action, implement your​ plan, and​ finally, review your​ progress, reevaluate, and revise your plan.

What are the steps involved in the financial planning process quizlet?

Terms in this set (6)Determine your current financial situation.Develop your financial goals.Identify alternative courses of action.Evaluate alternatives.Create your financial action plan.Review and revise the financial plan.

What is the first step in the planning process?

Establishing Objectives: Establishing the objectives is the first step in planning. Plans are prepared with a view to achieve certain goals. Hence, establishing the objectives is an important step in the process of planning. Plans should reflect the enterprise’s objectives.

What are the 7 steps of the strategic management process?

Seven steps of a strategic planning processUnderstand the need for a strategic plan.Set goals.Develop assumptions or premises.Research different ways to achieve objectives.Choose your plan of action.Develop a supporting plan.Implement the strategic plan.

What is a financial plan called?

A financial plan is sometimes referred to as an investment plan, but in personal finance a financial plan can focus on other specific areas such as risk management, estates, college, or retirement.

What are the elements of a financial plan?

The main elements of a financial plan include a retirement strategy, a risk management plan, a long-term investment plan, a tax reduction strategy, and an estate plan.

What is the first step in personal financial planning?

The first step in personal financial planning is to analyze your financial status. This means you need to determine your financial resources, such as how much money you earn each month, and financial responsibilities, such as the money that you typically spend each month.

What are the six steps in financial planning process?

Financial Planning in Six StepsEstablish and define the relationship with the client. … Collect the client’s information. … Analyze and assess the client’s financial status. … Develop the financial planning recommendations and present them to the client. … Implement the financial planning recommendations.More items…

What are the six major components of strategic planning?

In this blog we outline the 6 vital elements to successful strategic planning for your organization.Define your vision. … Create your mission. … Set your objectives. … Develop your strategy. … Outline your approach. … Get down to tactics.

What are the key elements to successful financial planning and budgeting?

The 6 components of a successful financial plan for businessSales forecasting. You should have an estimate of your sales revenue for every month, quarter and year. … Expense outlay. … Statement of financial position (assets and liabilities) … Cash flow projection. … Break-even analysis. … Operations plan.