What is Goal Based Planning?

What is Goal Based Planning?

Let’s keep it simple. Goal Based Planning is an ongoing process to help you make wise decisions about your finances that help you achieve your Financial Goals.

  • Have an overview of your finances and your future financial goals.
  • Gain control over your money and have peace in mind.
  • Reduce your stress by strategically taking care of your personal finances.

What Is Goal Based Planning Process?

There are six main steps that you need to take:

Step # 1 – Set Your Goals

Everything starts with goals. It is impossible to achieve anything and keep track on it without knowing what you really want to achieve or gain. Set your Short, Medium and Long term financial and other goals.

Step # 2 – Write Down Your Current Financial Situation

Write down what assets and liabilities you currently have. You need to have a clear overview in order to make the wise decisions that affect your entire life. Don’t forget to write down all insurances you have as well.

Step # 3 – Assess Your Financial Situation

Once you know what assets and liabilities you have, you have to evaluate your situation. What do you like about it and what not? What needs improvement and why? Are you achieving your (Financial) Goals you have set in step #1?

Step # 4 – Create an Action Plan

During this step you have to use the information you wrote down and create a plan to achieve it. The more specific you are the better. Think about different strategies you could use to reach your goals. Write these down and compare. Sometimes it is better to hire a Financial Planner or advisor, however, make sure you pick the one that fits with your needs.

Step # 5 – Act Based on Your Plan

This is the most crucial step at all. You can have an amazing plan, but if you don’t implement it, it is worthless. Once you have your road-map set how to achieve your Goals, you must take action and stop procrastinating.

Step # 6 – Review & Adjust Your Plan Over Time

You can’t just create your financial plan and forget about it. And you can’t just act based on it without reviewing it over time. Most likely your income, expenses, assets, liabilities, lifestyle, etc. are going to change over the time. Therefore you must monitor your financial plan as well and make adjustments where needed. How often should you do it? It all depends, but at least once or twice a year or whenever key changes take place.