The Financial Planning Process
The Financial Planning Process is a two way street, between the client and the financial adviser. It is a process which involves the following steps:
- Establishing where you are now, in the wealth creation life cycle.
In general, there are four stages of wealth creation that you go through, namely:
 Stage 1 – From 0 to 20 years old, when you are broke. It is the fun and carefree years. Someone else, usually mum and dad pays the bills, or the bulk of your meagre income is spent on living expenses and entertainment. You are yet to accumulate significant amount of assets or liabilities.
Stage 2 – From 20 to 40 years old, called the financial survival stage. This can be worse than being broke. You now have a regular income and can borrow to buy a car or a house. At this stage you’ll set up life by getting married, purchasing furniture, appliances and possibly have children as well. There are many expenses to pay and you’ll often borrow to cover them. This can generate a downward spiral if expenses exceed income and you borrow more to sustain the status quo.
 Stage 3 – From 40 to 60 years old, you become more financially stable. Finally, you approach a stage where you feel you can get a little 'traction' on your financial position. Your income increases and expenses fall away. You’re now in the best position to accumulate assets. The assets you own increase in value and add to your income, allowing you to reduce debt levels and add further to your asset base.
Stage 4 – 60 years and over, you’ve got financial freedom. Financial freedom occurs when your passive income after all expenses is enough to provide for your lifestyle. You're free to stop work if you choose!
Read Step 2 - What you have to do to get there
For more information on Financial Planning Process, or any of our financial services, you can ring us on (02) 9680-0131. Alternatively, you can book a FREE Consultation, by using our Online Enquiry Form.
|
