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Financial Planning Assessment: What, How, And Why?

Many people have trouble with money because they don’t know how to manage it properly, which can lead to debt and other financial problems. When it comes to finances, we…

September 8, 2022

Written by Kevin

Many people have trouble with money because they don’t know how to manage it properly, which can lead to debt and other financial problems. When it comes to finances, we often have many responsibilities. Between paying our bills, saving for the future, and investing in our growth, it can be easy to fall behind if we’re not careful. Furthermore, the pressure to provide and succeed can be even greater if you’re your family’s breadwinner or a business owner.


Financial planning is a way to stay on top of your finances and ensure you do everything possible to pursue your financial goals. This type of planning involves many things, from setting a budget to creating a retirement plan, so it can be challenging to do on your own. Luckily, financial advisors can help you with the process by providing guidance and support.


This blog post will discuss financial planning, what it is, how it works, and the benefits that come with it. We’ll also look at some steps you can take to get started with financial planning on your own and the importance of keeping your plan up-to-date. Business owners, entrepreneurs, and families can benefit from financial planning, so keep reading to learn more.

What Is Financial Planning, And How Does It Work?

Financial planning is creating a roadmap for your money. It’s about taking a holistic view of your finances and figuring out what you want to pursue short-term, medium-term, and long-term. This process is crucial in wealth management as it helps you make intelligent decisions with your money.


For example, let’s say you want to buy a house in the next five years. In your budget, you’ll need to factor in the down payment and how much you can afford to spend on a monthly mortgage. Then you can start saving and investing to have the money necessary for working toward your goal. Financial planning is an ongoing task and therefore requires frequent reviews and updates.

The Benefits Of Financial Planning

Many benefits come with financial planning. Some of the most notable ones include:

Increased Clarity About Your Finances And Goal

Without a plan, it’s easy to lose track of your spending and make impulse purchases that don’t align with your financial goals. When you have a plan in place, you’ll be more aware of your spending patterns and can adjust them accordingly.

Less Stress About Money

Worrying about money is one of the leading causes of stress. Financial planning can help reduce this stress by clearly understanding your finances. It can free up mental space and energy to focus on other areas of your life.

Greater Confidence

Financial planning also gives you confidence knowing you’re on the right track financially. Being more confident can be beneficial in and out of the workplace, leading to improved sleep, better focus, and stronger relationships.

Improved Decision-Making

Money decisions are often emotional. By planning your finances, you can make more informed and rational decisions. You’ll have the necessary tools and information during significant life choices like buying a home, starting a family, or changing jobs.

More Opportunities To Pursue Your Goals

When you have a plan, you can identify opportunities to save money and invest in your growth. For instance, you may be able to take advantage of employer matching programs or tax breaks. Every opportunity adds up and brings you one step closer to your goals.


Overall, financial planning provides many benefits that can improve your quality of life. If you’re unsure where to start, there are some initial steps you can take, as we’ll discuss next. Remember that teaming up with a professional financial advisor is also a great option if you’re not up for the task or want to feel extra confident about your plan.

Steps For Financial Planning

There’s no one-size-fits-all approach to financial planning. The steps you take will vary based on your unique circumstances and goals. However, here are some general tips you can use:

Start By Evaluating Your Current Financial Situation

First, look at your income, debts, expenses, and assets to get a clear picture of your financial standing. You can use online tools or software to help with this process.

Identify Your Financial Goals

What do you want to achieve in the short-term, medium-term, and long-term? Your goals can be anything from saving for retirement to taking a dream vacation. Be as specific as possible to create a plan to work toward them.

Create A Budget

Once you know your financial situation, you can start creating a budget. A budget is an ongoing tool that helps you track your spending and adjust as needed. There are various budgeting methods, so find what works best for you.

Save And Invest

One of the most critical aspects of financial planning is saving and investing for your future. You can start small by setting aside money each month into a savings account or investing in a low-risk option like an index fund.

Monitor Your Progress

Periodically review your financial situation and goals to guarantee you’re on track. Adjust your budget if anything has changed, such as a loss in income or an unexpected expense. Regular check-ins will keep you accountable and motivated.

Difficulties That Can Come Up When Financial Planning On Your Own

As you may have seen, financial planning has many moving parts. While it’s possible to do it on your own, there are some challenges you may face along the way, such as:


  • It Can Be Time-Consuming: From gathering all your financial information to creating a budget, a lot goes into financial planning. If you have a full-time job or other obligations, you’ll have difficulty finding the time to do it independently.


  • It’s Easy To Procrastinate: It’s not always the most exciting task, so putting it off can be tempting. However, the longer you wait, the further behind you’ll fall in pursuing your financial goals.


  • You Could Make Mistakes: If you’re unfamiliar with financial concepts, you could make costly mistakes. For example, you might invest in a high-risk stock without realizing it or fail to take advantage of tax breaks.

What Is Assessment In Financial Planning, And How Does It Work?

If you want to avoid the challenges of financial planning on your own, working with a professional can be a great solution. When you partner with a wealth advisor, they will conduct a financial planning assessment. Assessment is gathering information about your finances and goals to create a personalized plan.


A financial assessment will ask questions regarding:


  • Income: How much do you make each year?
  • Debts And Expenses: What do you spend each month? Do you have any outstanding debts?
  • Assets: What do you own? 
  • Insurance: Do you have health, life, or disability insurance?
  • Retirement: When do you want to retire? How much money will you need to support yourself during retirement?
  • Risk Tolerance: How much risk are you willing to take when investing?
  • Estate Planning: What would you like to happen to your assets after you pass away?

What Does Financial Planning Assessment Include?

The assessment process will vary depending on the wealth advisor you work with. However, most assessments will include:

A Review Of Your Current Financial Situation

Your wealth advisor will closely examine your income, debts, expenses, and assets. This way, they will know where you’re starting from and what challenges you need to address.

An Analysis Of Your Budget

After the professional has reviewed your financial situation, they will analyze your budget and ensure it’s realistic and achievable. Having unachievable goals could set you up for disappointment.

A Review Of Your Investment Portfolio

Your advisor will check if your investments align with your goals. Perhaps you’re currently invested in high-risk stocks, but your goal is to preserve your capital, which shows a lack of coherence.

Recommendations For Changes

Based on the assessment, your advisor may recommend changes to improve your financial situation. These changes could include saving more money each month or investing in a different type of account.

The Importance Of Assessment In Financial Planning Vs. Doing It On Your Own

Now that you know what financial planning assessment entails, you might wonder if it’s worth working with a professional. Here are some of the benefits of having an assessment done:


  • You’ll Get An Unbiased Opinion: When you do your financial planning, it can be easy to make mistakes. A wealth advisor can provide an objective perspective and catch any errors you might have missed.


  • You’ll Get Tailored Advice: Everyone’s financial situation is different, so generic advice isn’t always helpful. During an assessment, your wealth advisor will consider your unique circumstances and goals to create a customized plan.


  • You’ll Be Held Accountable: It’s easy to make excuses when trying to improve your finances. However, when you have someone to check in with, you’re more likely to stay on track.

Nesso Wealth – Live Your Life By Design, Not By Default

If you’re interested in working with a wealth advisor, at Nesso Wealth we have plenty of experience helping Connecticut residents with their financial planning. We offer assessments that cover all aspects of your finances, from budgeting to investing. Our wealth advisors will work with you to create a personalized plan based on your circumstances and get you on the right track to pursue your goals. Plus, we’ll be there to support and encourage you in every step.



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