An image of a man looking at charts on the laptop and comparing them with the charts on a piece of paper. How to build a financial plan in 4 steps

How to make a successful financial plan in 4 steps

A well-designed financial plan is one of the main pillars of every successful financial strategy. As the financial world has changed radically in the last three decades, people have access to a constantly increasing number of financial products.

However, a wide variety of available financial products doesn’t guarantee your financial success. You can be successful only when you have a financial plan in place that can help you achieve your financial goals.

 Are Britons financially literate?

The answer to the question is NO, or at least not so much as they should have been. According to the World Bank, 66% of the global population, including 33% of the UK’s population, are financially illiterate.

Statistics are even more shocking when it comes to children learning about finance at UK schools. A survey conducted by Ipsos Mori and published by the Financial Times showed that 90% of people in England admitted to learning “nothing at all” or “not very much” about finance during their school education.

A survey released by Student Beans expressed the need for more financial knowledge, a money-saving app available for mobile devices. Students who took part in the survey noted that only 10% of them had any personal finance lesson in 2020 that would help them achieve their future goals. 

What is financial planning?

Enjoying a good life is all about planning. People love to have a beautiful home, a brand new car or enjoy their holidays in their favourite destination. But how can they afford all these with just a salary? The answer is that they are in need of a financial plan.  

Financial planning is crucial because it allows you to make the most of your assets while also ensuring that you meet your long-term financial objectives. Your financial future depends on how detailed and well-thought is your plan. Of course, execution plays a significant role as well. 

How can financial planners help you? 

Most of us face financial challenges every day. Being well-prepared is the only way to have the financial security we need. Is it easy, though, when we don’t have the necessary knowledge? Daily routine and the quick pace of life do not allow us to immerse in things that we feel are not priorities or see as too complicated.

No one can blame you for that. But what can a person do to improve his financial situation at this stage in life? The answer could come from a financial planner. According to Investopedia, a financial planner is a professional who “helps clients meet their current money needs and long-term financial goals. A planner uses a structured process to guide clients toward prudent financial decisions to maximize their potential for meeting life goals.”

What are the steps of the financial planning process?

Every process has specific steps. Building a financial plan could be no different. Below you can read which are the basic steps. 

Find the right financial adviser

If you don’t feel qualified to manage your financial life, some professionals can help you. A financial adviser has the knowledge and expertise to design the plan on your behalf. However, a brief search will show that there are many people who present themselves as financial advisers without having the necessary background.

The choice of the right financial adviser is an essential step towards success. The person that gives you financial advice should be fully qualified with certifications issued by the most important organisations. A chartered financial planner would be the ideal solution to your problem. We would also advise you to work closely with a fully regulated financial services provider to avoid fraudsters and ensure that you enjoy a high level of services. 

Conducting a personal financial review

Conducting a personal financial review is one of the main ingredients of a successful financial plan. You might be wondering what a personal financial review is. A review of your finances is the only way for you and your adviser to know which resources you have in your arsenal. Without this information, you won’t be able to utilise your funds correctly and check your expenditure.

Your monthly salary or pension income, investments in assets such as bonds, stocks etc., your life insurance policy and your retirement plans are just some of the elements that should be reviewed. Keep in mind to not leave out any assets that could put a strain on the future performance of your financial plan. 

Development and implementation of the financial plan

Your financial adviser should now identify your needs and design a financial plan, offering different options for you to scrutinise and choose. We would like to note that you can find financial planning software in the market which has really evolved in the last few years. However, we suggest using a financial adviser as financial planning software is not advanced enough to monitor variable parameters and calculate your risk tolerance. 

Financial advisers work with you to deliver viable financial solutions. In addition, they are not only planners but they also can give you access to financial products that align with your strategy and help its actual performance. This option saves you time that you would spend searching for the right solutions in an industry that you don’t know well. 

Review of the financial plan

Once it is ready, you can start implementing your financial plan. However, things change quickly in the modern financial world. Some options that looked great in the beginning may become a burden quickly. A common mistake people make is thinking that they should not reevaluate investment advice and strategy.  

On the contrary, financial advisers note that a financial plan should be evaluated on a regular basis. One of the financial planning pillars is reviewing your strategy based on performance indicators. Knowing the disadvantages of your plan means that you can work closely with your financial adviser to amend it and achieve your goals. 

Build your financial plan with Holborn

Your monthly income or pension savings should not be the only funds you have available. Financial planning and analysis may sound boring, but it is the only way for your family goals to materialise. Nevertheless, you should not worry if you feel that you are not experienced enough to design a financial plan. 

Holborn’s fully qualified advisers are among the most experienced in the industry. For more than 20 years, we have offered financial advice to expats around the world. Our multiple international awards show that Holborn’s client support is second to none. If you would like to broaden your investment horizons, let us make a financial plan for you. Get in touch with us today. 

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