The six stages of the financial planning cycle

In general usage, a financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.

• Understand your needs and goals:

On one hand we have amorphous concepts like wants, need and dreams which do not exactly have any prescribed form. You can dream to be rich, you may want to be happy and you may need to be conservative. On the other hand we have more structured concepts like goals and objectives which forms the core of financial planning.

• Assess Your financial health:

What’s my net worth?

What’s my debt-to-income ratio?

What’s my housing situation?

Where is my money going?

Am I saving for retirement?

What’s my investment strategy?

What are my financial goals?

“Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like.”

• Create founds essential to your survival:

Make a list of your monthly NEEDS, and create a reasonable monthly budget for it.

• Follow a schedule of budget and stick to it:

Don’t treat your budget like a wish list be more realistic. Create a budget that works and allows you to be comfortable and happy. Have an understanding of what you are actually spending, what you can afford to spend, and what your priorities are.

• Monitor:

The easiest way to tract your budget you can download free budget app. You can create a budget in minutes, it will track all of your expenses. You can customize your template to make them fit your spending and saving needs.

• Refine your budget as needed:

Ideally, you should reflect on your budget at the end of every month and use that information to plan your budget for the next month. But more importantly you should sit down and assess your total budget and your overall financial goals at least once a year.