What is the first step in creating a financial plan?

The first step in creating a financial plan is assessing your personal financial situation. This involves taking a thorough inventory of your current financial standing, including income, expenses, assets, liabilities, and savings. Understanding where you currently stand financially is crucial, as it provides the baseline from which you will develop your financial goals and strategies.

By assessing your personal financial situation, you identify what resources are available to you and any obstacles you might face in achieving your financial objectives. This complete picture allows for a more informed approach when setting investment goals and planning for future expenses. It's essential to have a clear understanding of your financial health to make sound decisions going forward, such as determining how much you can allocate towards investments and what your overall financial aspirations should be.

Choosing an investment advisor and calculating future expenses come later in the process, as they depend on the insights gained from the initial assessment of your financial situation. Thus, starting with a thorough evaluation lays the groundwork for a coherent and effective financial plan.