• advice@octagon

6 Steps to Build a Financial Plan

Updated: Aug 10, 2021

“Planning is bringing the future into the present so you can do something about it now” - Alan Lakein

Planning plays a key part in our lives, and I think most of us would agree that if they want something to be a success, then it should be planned. That is certainly no different when it comes to your finances and planning your financial future.

The following steps are key to building a sound Financial Plan

1 - Establish Your Goals -

What do you want to achieve and by when? Be ambitious but not unrealistic with your goals, when would you like to retire, on how much and when do you want to pay off the mortgage. These are significant milestones that will form essential parts of your financial plan, but there will be many others that form part of the plan.

2 – Plan For The Unexpected –

Make sure you that you have planned for the unexpected so if the unexpected does happen, you can deal with it. That means protection for loss of life or income, also make sure your Will reflects your current circumstances and intentions. Any other assets, such as pensions are nominated to be paid to the people who need them.

Also have an emergency fund, six months of basic expenditure cost in an easily accessible bank account.

3 – Use the right tools for the job

Once you have decided you what you want to achieve then make sure you use the right tools for the job. That means an investment portfolio that is well-diversified and matches your risk tolerance, a pension for meeting your retirement income, an ISA for investment and life assurance products to protect against loss of life or income.

Of course, many people will have other assets they consider as part of their financial plan such as their own business and property, they will complement a well-run plan, but they should not be viewed as the silver bullet that will address all your goals and objectives.

4 - Use Technology to Model Your Future

A well thought through the plan is a big step to achieving your goals. However, how do you know if it will deliver? At Octagon, we use cashflow software which considers all your assets and using a robust range of assumptions; it will help you answer key questions such as will your pension provide an income throughout retirement? And if not, what do I need to do. A cashflow model will not provide definitive answers, but when prepared and used correctly, it can be a powerful tool to help people achieve their financial goals.

5 – Review Your Plan Regularly

Once your have established your plan don’t stick it in the drawer! That’s only just the beginning. With regular annual planning meetings you can address make modest changes annually rather than leaving it five years to find you are not on track and have to make significant changes to get back on track.

6 – Stick to the plan

Inevitably, life won't go quite as we plan and your goals and objectives will change over time; however, the key is stick with what you have agreed and if you need to make changes to stay on track make sure you follow through. Sometimes it will be tough, but like many aspects of life, it will become easier as you see your plans become a reality.

This article does not constitute advice. Anyone considering any form of financial planning should seek independent financial advice. Octagon Consultancy Limited is an appointed representative of Best Practice Group Limited which is authorised and regulated by the Financial Conduct Authority (FCA). You should note that the FCA does not regulate tax advice. Past performance is not indicative of future results. The value of your investment may go down as well as up

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