Exclusive 5 Key Steps To Basic Financial Planning

Financial Planning

The Goal of Basic Financial Planning

There is a real stigma around financial planning which revolves around the feeling that it is too much of a complex and future-oriented exercise. The reality is that financial planning all about trying to achieve financial freedom. This article describes financial freedom in greater depth but that is truly the underpinning of why we save, invest and set budgets for ourselves. Financial planning should not be a painful exercise that we dread.

We want to live within our means today so that the future will be brighter tomorrow. There really is no time horizon around this goal of financial freedom because financial planning should not just be a retirement planning exercise. In fact, the sooner that you achieve financial freedom via financial planning the better off you will be and the more options you will have in the long-term.

Construct an Investment Thesis & Build Wealth

Once you get into a surplus position each month it is important to invest in an emergency fund and short-term assets that are relatively liquid so that you can react and be secure in the event of a catastrophic event such as a job loss or health issue. Beyond that, you should think about diversifying your investments in stocks, bonds, commodities, and gold. Buying physical gold is a great way to hedge inflation and recessionary risks that are a part of investing. There are numerous great gold bullion purchase options for making wise decisions.


Likewise, there are a plethora or investment companies that will help you get started with investing. It is up to you to either determine your investment thesis by yourself or get a financial adviser to help you craft one. Taking action will be easy once you have an investment thesis and budget targets that you are hitting every week or month. You will be amazed at how quick you can achieve financial freedom once your wealth starts to compound and build over time.


Financial planning always starts at the ground level with budgeting. It is vitally important that you know how much cushion (or lack thereof) you have each month. There are numerous budgeting options but the cleanest is to create a spreadsheet showing your revenues and expenses and see how much is left over at the end of each week or month. There is no reason to fear this exercise because it will give you the information that you need to make the critical decisions on how to invest your budget surplus or cut back on your spending to reduce your deficit.

Make an Action Plan

After you get your budget finalized it is time to make an action plan. You need to target a savings amount that you want to hit each month which will serve as your basis for investment in the future. If you are in a deficit position each month the action plan becomes more focused on what you can cut back on or do without each month. In this situation, financial planning becomes more tactically focused on the variable expenses that you can directly impact in the short term. Don't focus on driving down your rent or mortgage unless you have a critical path towards making that happen.

Pay Off Debt

Your action plan should have some component of paying off debt in it. Debt and the interest that comes with it is not always bad because it helps you build up credit. However, it is almost always constricting and reduces your options in the future. Paying debt down over time is the most responsible action that you can take towards earning back your financial freedom over the long-term.

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