We plan for so many things in our lives and try to be in control of our futures.  Where and when to go on holiday...How to get that next promotion or new job...Buying a car or home....Starting or finishing our education...Finding the right partner and deciding on children...Whether to take the leap and start that dream business or dream about what we want to do with our time in retirement.  So much of our time is spent anticipating the future!

Yet how many of us take the time to sit down and really think about what our financial future will look like? Or evaluate on a regular basis how we are doing to meet our individual financial goals?

+What is (financial) planning?

Planning can seem like a complex topic. Most of us don't feel like we know where to start or how to anticipate our future financial needs. Yet it doesn’t have to be a daunting experience. Planning is essentially a personal road map for your finances. It helps you determine where you are today in your financial circumstances and how you are going to get to where you want to be. Aside from focusing on just money, planning also considers how to protect your assets and those you love from potential financial difficulties.

+Why plan now?

Women today are living longer, yet many of us have not considered what our individual financial abilities will be when we reach our 50's, 60's, 70's and beyond. It’s easy to take things for granted when there’s salary and income coming in, but are you saving enough to cover all of your retirement years? Also, a lot can happen in life. It’s unpleasant to think about, but divorce and unexpected death do happen. So protect yourself by planning now how you might financially be able to handle those possible situations.

+Take stock

The best way to start is to take a snapshot of your current financial picture. First write down what assets you have including bank accounts, investment portfolios and property. What about any liabilies, such as credit card debts, student/car loans and mortgages?

What is your overall net worth (your assets less your liabilities)?

You also need to look at your household income and expenditures, or your "cash flow". Do you know how much you spend each week, month, year? Putting together a budget for your household expenditures and tracking (using an app or just with a pencil and notebook) how much you spend against those budgets is a useful way of understanding where your money really goes.

Do you also have a personal will in place should something happen to you or a loved one? How about insurance against critical illness preventing you from working or being able to pay off debts such as the mortgage? Do you have protection against the costs of medical emergencies that may significantly affect your savings? It's impossible to protect ourselves from every risk in life, but it's best to consider the risks that can lead to serious financial difficulty.

Planning requires taking a holistic look at your overall financial circumstances and understanding the potential risks that may impact your financial abilities.

+Goals, goals, goals

What are the responsibilities, worries and dreams in your life? A critical aspect of being able to plan is knowing yourself and your priorities. Then you can set the financial goals that matter the most to you.

Some questions to help you start thinking about your own goals and priorites:

  • Where do you want to be in terms of your current lifestyle? What about in 5 years? 10 years?

  • Will your income need to grow to meet your lifestyle needs or will you be able to live on less income?

  • Are you able to do the things you enjoy without having to worry about money or be in debt to pay for those?

  • Do you want to buy your own home or purchase property for your children to get them on the property ladder?

  • Do you have debts that you want to pay off so you can start another career or a new business venture?

  • Do you want to work until a specific age or do you prefer to continue working well past retirement age?

  • How will you fund the years when you're not working, either during a career break or in retirement? Will your expenses change?

  • What are your financial responsibilities to those you care about? For example, supporting children with their education or taking care of elderly parents or siblings?

  • Do you want to be financially free to pursue your hobbies and interests, such as travel, education, charities, sport, collecting, etc?

Once you know your goals, think about how you prioritize them. Which goals are the most urgent or most important to you? This will help you decide which goal(s) you will work towards first and perhaps where you focus your planning.

+Identify any gaps

Now start to look at whether your current finances match your goals.

Does your current income and expenditures match up with the goals you identified as being the most important to you? Do you have enough money and assets saved to last you through your years of retirement? How much money will you need each year to pay for your children's education? What are you saving each month or year toward purchasing a home?

Identifying possible gaps between your goals and your current finances helps highlight areas that need your attention. You may discover you have you been saving wisely and you are already well on your way to meeting your goals and maybe meet new goals that you thought would be a financial stretch. Alternatively, you can also quantify any shortfall.

If you find there is a significant gap between your goals and current finances, the financial planning process becomes even more critical. The sooner you begin identifying gaps, the better you'll be able to change the way you manage your money and create the financial future that you want.

+What is your plan?

This stage is where you begin forming your personal financial plan. Start by thinking about what specific steps to take to achieve your goals and by when. Your plan is a financial roadmap to help benchmark whether your goals are financially viable and close the gaps between your goals and your financial ability.

By planning, you can decide whether to increase your savings and/or income, perhaps take on more risk in your investments for higher returns, and/or taking advantage of tax efficient options (such as ISAs, pensions, trusts, EIS/VCTs) to lower your tax rate and increase your savings. The answers to these decisions will be unique to your individual circumstances and may also change over time.

We often hear the expression, “expect the unexpected”. It is critical to include elements of protection within your plan. Ways to protect yourself from the unexpected can be done by putting in place personal or joint wills for partners, life insurance, and critical illness policies. Depending on your personal circumstances, one form of protection may be more relevant for you than aother. Protection is a key piece of a financial plan and it is important to discuss this with your family/partner, trusted friends and/or expert advisor.

+Find the right advisor for you

If you've gone through all the steps above, you’ve now put together the basic elements of your individual financial plan. Now that you know your goals and how/when you want to achieve them, you may find it useful to seek out the professional advice of a financial advisor to leverage more complex options in financial planning, such as tax and estate planning or transferring from corporate to personal pensions.

There are many different types of professional financial advisors, ranging from tax accountants to specialist financial planners and even now online "robo" advisors. Some advisors may be better at advising you for your personal circumstances and it helps to ask around for other's experiences with their advisors and client references from advisors before engaging with them. The "right" advisor should not only be knowledgeable and trustworthy, he/she should understand your personal circumstances and take the time to explain what is the value he/she can provide for you.

As with investment advisors, it is important to find out about the advisor's fees upfront and to understand what is the right option for you so you don't pay for what you might not need. The traditional high-touch and in-person advisory model may charge you an annual fee based on the advice they provide for you. Robo-advisors that provide their services online may charge lower fees, but more off-the-shelf service. There are many advisor models out there so be sure to look and ask around for the right option for you.

Find out the key guidelines for sound investing in "Investing 101".