The 5 Steps of Successful Financial Planning

There is never a wrong time to begin with a financial planning strategy that will best suit your needs for your future. Starting as young as possible is always the best option but re-evaluating your financial situation later in life is also a healthy exercise. Having a financial plan assists you in assessing where you are today and where you want to be in the future. The leading financial planners at Efficient Wealth explain five steps to get you started.

Steps Towards Successful Financial Planning

A financial plan is like a road map. Where you are now is where you start. Where you want to end up is your destination. To make it easier to reach your destination, have rest stops along the way where you assess how far you have come and whether you are still moving in the right direction.

  1. Set goals: Your financial planning roadmap should have rest stops. Short-, mid- and long-term goals make your journey easier. A short-term goal is a level of financial fitness that you would like to achieve within the next five years. Mid-term goals could be set between five and 10 years and long-term goals could be set for 10 years plus. To avoid disappointment, be realistic when you set your goals.
  2. Assess your net worth: Work out where you are now. List all your assets like property, savings accounts and other investments. Then make a corresponding list of all your liabilities like credit cards, clothing accounts, loans and your home loan. Your assets minus your liabilities determine your net worth. Do not be despondent if you end up with a negative figure. Many people are in this position when they first start their financial planning.
  3. Start a monthly budget and stick to it: Your budget must be realistic and include everything. It is important to know where your money is going and how much of it you spend. Separate your budget into two areas: essentials and luxuries. Essentials include items like rent, utilities and groceries, and luxuries include weekly entertainment and eating out. At this point, test different scenarios against your budget like opting to purchase a cheaper car or downsizing your home in exchange for additional liquid cash to achieve your goals.
  4. Manage your debt: Not all debt is bad debt. Investments such as your home loan count toward your credit score and you receive a fixed asset in return. Attempt to resolve any bad debts like high-interest loans, credit cards or clothing accounts. Every cent you pay on interest and finance charges is a cent you cannot invest in your future.
  5. Emergency funds and savings: These funds help you pay for expenses like out-of-pocket medical emergencies or unforeseen vehicle repairs. This should be your first payment every month and then continue to assume it is not there because it is only to be used in extreme circumstances.


These are five basic financial planning steps that will set you on your way to attaining financial freedom.

We have not covered the investments that you should consider to make your money work for you. . It also omits important policies like short-term insurance, medical aid, retirement planning, fiduciary planning and many other intelligent financial planning solutions that you should put in place to enjoy your road to retirement and beyond. For that, consider partnering with the expert financial planning consultants at Efficient Wealth. It’s what we do!