Annual Financial Planning: What, When, and How To Do It

A sound plan is the road map for your financial future. Without a solid foundation, achieving long-term financial goals can feel like throwing spaghetti at the wall to see what sticks. Think of annual financial planning as a vision board for your financial life. It allows you to prioritize your goals and track progress based on tangible milestones. Want to get ahead on your financial planning this year? These steps will help. 

But first, what is a financial plan?

Much like planning a multi-phase project at work, financial planning is simply a method of aligning your financial situation with your goals. It acts like a blueprint from which you can build your financial life. Contrary to popular belief, financial planning isn’t only for people with large sums of money. It’s important for anyone who wants to achieve a goal involving a financial investment, such as buying a car, house, going back to college, or saving for retirement. 

When to do your financial planning 

Whether you have an existing financial plan or not, the beginning of the year is an excellent time to review and evaluate your plan. By planning now, you can put your money to work throughout the entire year. Because financial planning is an ongoing process, there are no strict timelines. However, it’s good practice to set aside time for an in-depth annual review and monthly check-ins. 

How to plan for a financially successful year 

You don’t need to invest in a financial advisor to plan for your financial future. In fact, 99 percent of Americans manage their own financial planning. So, don’t be afraid to roll up your sleeves and take matters into your own hands this year. To start, consider where you currently stand in terms of your long-term financial goals. You can do this by determining your net worth. Simply subtract your liabilities (what you owe, such as loans and mortgages) from your assets (what you own, such as savings and equity). The remaining total is your net worth. 

Now that you know where you stand, you can set SMART financial goals. SMART goals are specific, measurable, achievable, realistic, and time-based. Using this formula to set concrete goals will help you identify which steps you need to take to get from where you stand to where you want to be with your finances. 

No two financial plans are the same. Yours may require budget updates, emergency savings, debt reduction, investment organization, retirement or estate planning, tax preparation, or asset insurance. Whatever your financial goals involve, make a habit of reviewing your plan regularly and making any necessary adjustments to stay on track. 

Need help saving? 

Ultimately, financial planning should allow you to comfortably maintain your current lifestyle while also making progress toward future financial goals. As a federal credit union, we care about helping you achieve those financial goals. That’s why we offer lower rates and fees to help you save money. To learn more about how DEXSTA can help you achieve your financial goals, contact us.