Alright, let’s skip the usual pleasantries. I’m Michael Ryan, and for over 25 years, I wasn’t just a ‘financial planner’ – I was in the trenches with hundreds of folks, untangling the messes, celebrating the wins, and figuring out what actually separates financial stress from financial freedom.
Now that I’m retired, I’m not selling anything. I’m here to share the unfiltered truths, the practical steps, and maybe bust a few myths I saw trip people up time and again.
Feeling overwhelmed or like you’re guessing with your money? You’re in the right place. This isn’t textbook theory; it’s hard-won experience distilled for you.
Let’s get real. Did you know that as of March 2025, a staggering 67% of Americans were living paycheck to paycheck, according to a report by PYMNTS Intelligence.
I saw this reality play out daily in my practice – smart, hardworking people trapped in a cycle of financial anxiety. It highlights a massive disconnect between income and security.
But here’s the raw truth I learned over 25 years: A solid financial plan isn’t just about spreadsheets; it’s your roadmap out of that anxiety. It’s about taking control.
In this guide, I’ll walk you through the exact process I used with clients, cutting through the jargon and adding hard-won insights you won’t find elsewhere. We’ll tackle:
- Finding your ‘why’ – the real motivator that keeps you going.
- The crucial (and often avoided) step: Facing your current financial reality, numbers and all.
- Crafting a personalized financial plan – strategies that work in the real world.
- The simple power of automation – making progress effortless.
- Protecting your hard work – essential steps I’ve seen save families from disaster.
- Knowing when you need backup: Choosing the right professional help (and avoiding the wrong kind).
Prefer watching? Here’s a quick video slideshow where I walk through the key stages of the financial planning journey:
Why This Article is Different: Insights from Experience
Plenty of blogs list financial steps. So, why stick with this one? Because I’m not just pulling from textbooks. I’ve sat across the table during market crashes (’08 anyone?), celebrated clients hitting retirement goals they thought impossible, and navigated the messy human side of money for 25+ years.
You’ll get the raw insights:
- The costly blind spots I saw trip people up repeatedly.
- The simple, actionable habits that created real momentum.
- The mindset shifts that separate financial stress from financial strength (it’s not just about the numbers!).
That difference between thriving and struggling? Often, it boils down to having a clear map (your plan) and the right fuel (your ‘why’). Let’s build yours.
If you like this different approach, be sure to sign up below and never miss an article by me again.
Key Takeaways: Understanding the Importance of Financial Planning Process
- What are the essential steps…?
The core financial planning process involves:
Defining clear goals (your ‘why’), assessing your full financial picture (no hiding!), creating a realistic budget & plan, implementing consistently, and—crucially—regularly reviewing and adjusting.
Planner’s Tip: Most people skip the review; that’s where plans fall apart. - How do I find my financial “why”?
Dig deep past ‘get rich.’ What does money enable for you? Freedom? Security for loved ones? Experiences? Write down those core motivators.
Planner’s Tip: Keep it visible! A sticky note on your monitor or bathroom mirror works wonders when motivation dips. - Why is assessing my current financial situation important?
It’s your non-negotiable starting point. You can’t map a route without knowing your current location. Calculating net worth, tracking cash flow (income vs. expenses), and listing all debts gives you the raw data needed to build an effective plan.
Planner’s Tip: Be brutally honest here; accurate data leads to realistic plans. - How can I automate my finances effectively?
Set up automatic transfers the day after payday for savings (‘pay yourself first’), bill payments (avoiding late fees!), and investments (dollar-cost averaging).
Planner’s Tip: Treat savings and investment transfers like mandatory bills. Automation removes willpower from the equation. - When should I seek professional financial advice?
Consider partnering with a qualified advisor, ideally a Certified Financial Planner (CFP®) who acts as a fiduciary (puts your interests first!), during major life changes (marriage, inheritance, retirement), when complexity increases, or if you need objective guidance and accountability. Planner’s Tip: Don’t wait until you’re already overwhelmed.
Let’s dig in and start building that roadmap to financial freedom for you!
The Financial Planning Process Steps: Your Roadmap to Financial Freedom
Financial freedom. Sounds dreamy, right? Like some Instagram-filtered sunset
Let’s be brutally honest. For most of us, the journey to financial security feels more like a chaotic mix of hope and fear, progress and setbacks. It’s messy, it’s frustrating, and it’s real… It was terrifying. And it was real.
My reality then, and sadly, the reality for too many now. So, what changed?
Lottery win? Secret stock tip? Nope. What changed was my perspective, fueled by desperation and later, by guiding hundreds of others. I stopped chasing the fantasy and started focusing on building a solid foundation, brick by messy brick.
That messy reality? It’s why we need a process. Not a magic wand, but a reliable compass. Let’s walk through that compass: the financial planning process.
Overview of the Steps of the Financial Planning Process
Okay, enough about the ‘why’ – let’s get into the ‘how’. Forget magic formulas; this is the roadmap. It’s a structured process, the kind recognized by professional bodies like the CFP Board and the Financial Planning Standards Board (FPSB) because, frankly, it works when you work it. Think of it like building a solid house – skip a step, and things get wobbly fast.
Read my recent article on the benefits and the basics of financial planning.
Here are the 7 key stages I guided every client through, distilled with insights from the trenches:
1. Understand Your Relationship & Define Goals (The ‘Why’ Meets the ‘What’)
- What it is:
Clearly define what you want to achieve (buy a house, retire early, fund education) and why it matters.
Make clear financial goals that are SMART (Specific, Measurable, Achievable, Relevant, Time-bound). - Michael Ryan’s Insight:
This isn’t just about numbers. I saw clients flounder when their goals weren’t deeply personal or specific. ‘Get rich’ isn’t a goal; ‘Save $1M for retirement by age 60 to travel freely’ is.
2. Gather Your Data (The Financial X-Ray):
- What it is:
Collect all relevant financial information – income proof, bank statements, investment accounts, insurance policies, debts, wills, etc. - Michael Ryan, Financial Experts Warning:
Don’t estimate or hide things! Garbage in, garbage out. Accurate data is non-negotiable.
I often had clients ‘forget’ about a small credit card… until it wasn’t small anymore.
3. Analyze Your Current Status (The Reality Check):
- What it is:
Evaluate your data to understand your net worth (assets vs. liabilities), cash flow (income vs. expenses), debt load, and insurance coverage. Where are you now? - Planner’s Insight:
This can be the toughest step emotionally, but it’s also the most empowering. Knowing your starting line is crucial. Use tools, apps, or a simple spreadsheet – just get it done.
4. Develop the Plan (Your Personalized Roadmap):
- What it is:
Create specific recommendations and strategies for budgeting, saving, investing, debt management, insurance, and estate planning to bridge the gap between your current status and your goals. - Michael Ryan’s Expert Insight:
A plan isn’t one-size-fits-all. It needs to fit your life, risk tolerance, and timeline. Generic advice rarely works long-term. This is where strategy comes in.
5. Implement the Recommendations (Taking Action):
- What it is:
Put the plan into action. Open accounts, set up transfers, adjust insurance, consolidate debt, execute estate documents. - Financial Advisor Warning:
Analysis paralysis is real. Many people create a beautiful plan and then… do nothing.
Implementation requires action. Start with one or two key steps.
6. Monitor Progress (Steering the Ship):
- What it is:
Regularly track your progress towards your goals. Review account statements, check your budget, monitor investment performance. Are you on track? - Planner’s Insight:
Set a schedule for this – monthly for budget/cash flow, quarterly or annually for investments/net worth.
Don’t ‘set it and forget it’ entirely. Life happens.
7. Review and Adjust (Course Correction):
- What it is:
Life changes (new job, baby, market shifts, unexpected events). Your plan needs to adapt. Periodically review and update your goals and strategies. - Planner’s Insight:
This is crucial and often missed. A plan created 5 years ago might be irrelevant today.
Flexibility and willingness to adjust are key to long-term success. I always told clients: your financial plan is a living document.
Defining Your Financial Goals: Discovering Your “Why”
(Yeah, Yeah, I Know… But Seriously)
Everyone talks about finding your “why,” your purpose. It’s become almost a cliché, hasn’t it? Another piece of well-meaning but ultimately useless advice. But. What if, your why, really mattered?
What truly matters to you? Not what should matter, not what society tells you to value, but what genuinely makes your soul sing?
Is it the freedom to travel, to explore, to wander?
Is it the security of providing for your family, of creating a safe and loving home?
Is it the ability to pursue your passions, to create, to contribute, to make a difference in the world?
Or maybe – and this is perfectly okay – it’s simply the quiet comfort of knowing you’re not one unexpected bill away from disaster.
How Do I Find My Financial “Why”?
Find your financial “why” by digging deep and identifying what truly matters to you – freedom, family, security, contribution. Write it down and keep it visible as a constant reminder of your purpose.
My “why” evolved over time. At first, it was simply survival, escaping the paycheck-to-paycheck cycle.
Now, it’s much much, deeper. It’s about leaving a legacy, about making a positive impact on the world, about empowering others to achieve their own financial freedom.
What’s yours? Dig deep. Be honest. Write it down. Not in some dusty journal, but somewhere visible. Planner’s Tip: I had clients tape it to their dashboard or make it their phone wallpaper.
Why? Because when cutting back feels like deprivation, or market news screams panic, your ‘why’ is the anchor. It reminds you why the temporary discomfort is worth the long-term gain.
Your budget tells your money where to go; your ‘why’ tells you why you’re bothering..
Assessing Your Current Financial Situation: Facing the Music
Okay, this is where it gets real. Assessing your current financial situation is like stepping on the scale after a holiday binge – you might not like what you see, but you need to see it.
Your Current Financial Reality
It’s about facing reality, acknowledging the good, the bad, and the ugly. No judgment, no shame, just honest assessment. It is time, to be honest with yourself.
Calculating Your Net Worth: The Financial Truth
- Learn How To Calculate Net Worth – what you own (assets) minus what you owe (liabilities). It’s a snapshot, a financial selfie, unfiltered. Don’t be discouraged if the number isn’t what you hoped for. It’s just your starting point.
Use a free template like my my Free Net Worth Calculator or an app. Don’t fudge the numbers!
Planner Tip: Update this annually – seeing it grow is powerful motivation.
Tracking Income and Expenses: Understanding Your Cash Flow
Tracking Income and Expenses: Understanding Your Cash Flow (Where’s it REALLY Going?)
- Track every dollar in and out for at least a month, ideally three.
- Use an app like You Need a Budget (YNAB) or Empower or even a simple notebook. The goal? See where your money actually goes, not where you think it goes.
- Planner Insight: I can’t count how many clients were absolutely floored by their ‘small subscriptions’ or ‘dining out’ totals once they tracked honestly.
- Don’t judge, just observe. You can find helpful budgeting worksheets.
- Consumer.gov
Analyzing Debt: Acknowledging the Elephant in the Room
How do I assess my financial situation?
List everything: Credit cards, student loans (federal & private), car loans, mortgages, personal loans. Note the interest rates (APRs) and minimum payments.
Planner Tip: Knowing the APRs is critical for prioritizing repayment (more on that soon).
Experian Consumer Debt Study: This report highlights average U.S. consumer debt, totaling $17.57 trillion as of Q3 2024, with an average individual debt balance of $105,056. It breaks down debt by type (e.g., mortgage, student loans, credit cards) and generation
Building Your Financial Plan: Creating Your Roadmap
How do I build a financial plan? It’s Not as Scary as You Think. Build a financial plan by setting goals, assessing your finances, and creating strategies for budgeting, debt, and investing.
This isn’t about shame; it’s about clarity. You can’t fix what you don’t measure.
So, you’ve faced the music, you’ve got a handle on your current situation. Now what? Now, you start to close the gap from where you are today financial and what you want to achieve financially. The bridge between where you are and where you want to be. It’s about creating a plan, a roadmap, a strategy.
Budgeting: Your Spending Plan for Success
A budget isn’t a prison; it’s a plan. It’s about telling your money where to go, instead of wondering where it went. Experiment with different methods – zero-based budgeting, the 50/30/20 rule, the envelope system – until you find one that clicks, one that feels sustainable, not restrictive.
Irregular Income? No Problem (Seriously)
If your income fluctuates, a traditional budget can feel like a cruel joke. Don’t give up! Base it on your lowest likely monthly income, prioritize essential expenses, and then allocate any surplus strategically – emergency fund, debt repayment, savings, investments, and, yes, even a little bit for fun.
Learn more about my picks for the Best Budgeting Apps for 2025
Tackling Debt: Slaying the Dragon One Step at a Time
Don’t let debt paralyze you. Tackle it strategically. Prioritize high-interest debt (those credit cards with the insane interest rates – yeah, those). Consider the Debt snowball method (paying off the smallest debts first for motivation) or the Debt avalanche method (paying off the highest-interest debts first to save money). And remember, progress, not perfection, is the goal.
Learn more about How To Get Out of Debt
Investing: Planting Seeds for Future Growth
- Start Simple: Consider low-cost Index Funds or ETFs (Exchange-Traded Funds) [Link to simple definition]. These baskets of investments offer instant diversification.
- Be Consistent: Automate regular contributions (Dollar-Cost Averaging). This smooths out market bumps.
- Know Yourself: Understand your risk tolerance (how much volatility can you stomach?) and time horizon (when do you need the money?).
- Think Long-Term: Investing is a marathon, not a sprint. Markets go up and down. Panicking during dips is usually a costly mistake. Historically, staying invested pays off – for instance, the S&P 500 has averaged roughly 10% annually over the long run [Link to source/disclaimer about past performance].
- Asset Allocation is Key:Â Deciding how to split money between stocks, bonds, etc. [Link to Asset Allocation explanation] is crucial.
Planner Insight:
The most successful investors I worked with weren’t market geniuses; they were consistent, patient, and didn’t panic sell. Start early, even small amounts, and let time do the heavy lifting.
Automating Your Success: Making Good Habits Effortless
This is where the magic happens. Well, not magic, but close. Automation is about making good financial habits effortless. It’s about setting up systems that work for you, even when you’re not actively thinking about them.
Make sure you pay yourself first.
The Power of Automation in Savings and Investments
How do I automate my finances? Automate by setting up automatic transfers for savings, bill payments, and investments. Automate $X or X% from every paycheck. Straight into your 401k or IRA. Do it today.
Automate transfers from your checking to savings account on payday.
Even if it’s just $20 a week, it adds up.
Treat it like a non-negotiable bill.
Planner Insight:
Automation frees up mental energy. Instead of deciding to save each month, it just happens. It turns good intentions into consistent action. This was a game-changer for so many clients.
Investments – Consistent Growth (Slow and Steady Wins the Race)
Set up regular, automatic investments. Dollar-cost averaging is your friend. Consider a robo-advisor like Betterment, Wealthfront, or Schwab Intelligent Portfolios. Why? Low-cost automated investing.
Setting Up Automatic Bill Payments: No More Late Fee
Automate your bill payments. It’s a no-brainer.
Automation isn’t about being lazy; it’s about being smart. It’s about leveraging technology to make your life easier and your financial future more secure.
Protecting Your Future: Building Your Financial Fortress
Life throws curveballs. It’s inevitable. Protecting yourself and your family from financial risks is essential. This isn’t about fear; it’s about preparedness.
What are key financial protection elements? Key elements include insurance (life, health, disability, property, liability) and estate planning (will, power of attorney, healthcare directive)
Read my Guide to Different Types of Insurance Policies & Insurance Coverage You Need
Evaluating Insurance Needs: Your Safety Net
Evaluate your needs with my guides for life insurance, health insurance, disability insurance, homeowners insurance/renters insurance, and auto insurance.
Don’t skimp on insurance to save a few bucks now; it could cost you dearly later.
Estate Planning: Ensuring Your Legacy
Do You Really Need an Estate Plan? Discover the Benefits & Essential Documents
- Create or update essential documents: see my guides on a will, power of attorney, and healthcare directive.
This isn’t just for the wealthy; it’s for anyone who cares about what happens to their loved ones and their assets. - For more in depth information on estate planning see Estate Planning
11 Essential, Important, & Basic Estate Planning Documents You Need Today
American Bar Association (estate planning resources)
Seeking Professional Guidance: Finding Your Financial Yoda
Look, you can DIY your financial plan, especially early on. But let’s be honest, sometimes you need a guide – your ‘Financial Yoda.’ When did I see clients benefit most from professional help?
- When life gets complex: Marriage, divorce, kids, inheritance, selling a business, nearing retirement – these often have financial ripples you might not anticipate.
- When you’re feeling stuck or overwhelmed: Sometimes you just need an objective perspective and a clear path forward.
- When you need behavioral coaching: Frankly, the biggest value I often provided wasn’t stock picks; it was stopping clients from making emotional decisions during market panic or overspending during good times. As Morningstar’s Christine Benz points out, often “The biggest mistake people make is not having a plan at all.” A good advisor helps you create and stick to that plan.
How to Choose the Right Kind of Help (Crucial!)
How do I choose a financial advisor?
- Prioritize a FIDUCIARY: This is non-negotiable. A fiduciary is legally obligated to put your best interests first. Ask point-blank: “Are you a fiduciary at all times?” Get it in writing if possible. Many Certified Financial Planner (CFP) adhere to this fiduciary standard.
- Understand How They Get Paid (Fee Structure Matters!):
- Fee-Only: They are paid only by you (hourly, flat fee, or % of assets managed). No commissions for selling products. This is generally the gold standard for minimizing conflicts of interest. Financial Planning Association (FPA) for Fee-Only Planners and National Association of Personal Financial Advisors (NAPFA) Planner Search, filter by compensation.
- Fee-Based: A mix – they charge fees and can earn commissions. Be wary here, as conflicts can arise.
- Commission-Based: Paid primarily through selling financial products (insurance, mutual funds). High potential for conflicts of interest.
- Interview 2-3 Advisors: Don’t just hire the first one you talk to. Ask about their experience, philosophy, typical clients, and exactly how they are paid. Check their background on [Link: FINRA BrokerCheck]. Does their personality click with yours? Trust your gut.
- Planner’s Bottom Line from Michael Ryan:
A great advisor acts as your thinking partner, simplifies complexity, and provides accountability. As Michael Kitces, a voice I respect in the industry, often says, “Financial planning is not about predicting the future, it’s about preparing for it.” A good advisor helps you prepare.
Your Next Steps To Completing The Financial Planning Process
This isn’t a sprint; it’s a marathon. A messy, beautiful, sometimes frustrating, but ultimately rewarding financial marathon. There will be setbacks, detours, and moments of doubt. But keep your “why” close, your vision clear, and your steps consistent. And remember, you’re not alone.
What’s your next step? Not tomorrow, not next week, but today? Share your thoughts, your struggles, your triumphs in the comments below.
Let’s build a community of support, of shared experience, of real, human financial journeys. Because that’s what it’s all about, isn’t it?
In Summary And Your Next Steps
In summary, the financial planning process is not just about numbers; it’s about understanding your life, your values, and your goals. By defining your “why,” assessing your current situation, and creating a strategic plan, you can take control of your financial future.
From my experience, the most successful individuals are those who embrace the journey, learn from their mistakes, and remain adaptable. Remember, financial planning is a marathon, not a sprint.
So, what’s your next step? Don’t wait for the perfect moment—start today! Whether it’s defining your financial goals, tracking your expenses, or automating your savings, take action now.
If you have questions or want to share your journey, leave a comment below. Let’s build a community of support and empowerment together. And if you’re ready for personalized guidance, contact us to book a consultation. Your financial freedom awaits.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
- Sharing the article with your friends on social media – and like and follow us there as well.
- Sign up for the FREE personal finance newsletter, and never miss anything again.
- Take a look around the site for other articles that you may enjoy.
Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
