What Is Financial Planning? How It Works and What to Expect

Most of us have big money questions. How do I save enough? When can I retire? Am I even doing this right?

Financial planning helps you answer these questions. And it’s not just for millionaires with stock portfolios. Real financial planning helps you use the money you have today to build the life you want, no matter your starting point.

Ahead, we’ll walk through what financial planning really means, how it works, and what to expect if you decide to DIY it or sit down with a professional.

Table of Contents

1. Why financial planning matters
2. What financial planning includes—and what it doesn’t
3. How financial planning works (step-by-step)
4. Is financial planning right for me?
5. Common goals financial planning can help you achieve
6. How much does financial planning cost?
7. Where to start if you’re interested in financial planning
8. FAQ

Why financial planning matters

Money touches almost every part of your life. When you have a financial plan, you’re not just guessing whether you can afford a big move, take a new job, or retire early. You have a clearer picture of what’s possible and what needs to happen to get there.

But here’s the thing: Only about one-third of Americans have a documented financial plan, according to Schwab’s 2024 Modern Wealth Survey.

The ones who do?

• 76% say they feel more in control of their finances
• 96% say they feel confident they’ll reach their financial goals

The main reason for this boost in confidence? Financial planning helps you feel more in control of your money, like you’re in the driver’s seat instead of just drifting along.

For example, financial planning can help you:

• Set priorities when life feels overwhelming
• Prepare for the unexpected, like medical bills or job changes
• Avoid costly mistakes that come from guessing or hoping things will “just work out”
• Feel more confident in big and small decisions

Every client’s experience is different depending on their goals, but one of the biggest moments of clarity usually comes when everything, such as financial goals, life priorities, and dreams, is laid out in one place. Seeing it all together gives them a clearer picture of where they are, what they need to do, and how to get where they want to be. That’s when it really clicks: they’re not just planning money—they’re planning a life that feels meaningful.

What financial planning includes—and what it doesn’t

Good financial planning covers much more than just investing your money. It helps you tie your money decisions today to the life you want tomorrow, so you have a strategy to get there.

For instance, a typical financial plan might include:

• Retirement planning. Building a road map to help you retire comfortably, whether that’s at 55 or 75.
• Debt payoff strategy. Figuring out the smartest way to tackle student loans, credit cards, mortgages, or other debts.
• Investment strategy. Choosing an investment approach that fits your goals, time horizon, and risk tolerance.
• Estate planning. Making sure your assets go where you want after you’re gone and minimizing taxes along the way.
• Tax planning. Strategizing how to legally lower your tax bill now and in the future.
• Budgeting and cash flow management. Helping you spend, save, and invest in a way that supports your goals, not just your bills.

That said, financial planning usually doesn’t include:

• Day trading advice
• “Get rich quick” schemes
• One-size-fits-all plans
• Tax preparation services (although a good planner will often coordinate with your CPA)

Financial planning is also different from pure investment management. Investment managers mainly focus on growing your money; financial planners look at your entire financial life, from your insurance to your savings goals to your estate documents.

How financial planning works (step-by-step)

Whether you do your own financial planning or work with a professional, the basic process usually looks like this:

1. Intro session or discovery call

If you’re working with a financial planner, it usually starts with an introductory meeting. You’ll talk about where you are today, where you want to go, and whether it feels like a good fit to work together.

If you’re doing it yourself, this step is about getting brutally honest: What are you hoping to achieve with your money? What’s working and what’s not?

2. Review of your financial snapshot

Next, it’s time to pull together the details. That includes your income, savings accounts, debts, investments, insurance policies, and monthly expenses.

This is where you lay everything out in one place so you (and your advisor, if you’re working with one) can clearly spot opportunities, risks, and areas that need attention.

3. Goal setting and values alignment

Once you have your snapshot, financial planning typically gets really personal. This is where you get clear about what you want your money to make possible.

You’ll define specific goals, like retiring at 60, buying a second home, or funding your kids’ college. You’ll then tie them back to your deeper values, like security, freedom, or family.

4. Personalized plan creation

With your goals mapped out, you (or your advisor) will then build a plan that covers savings strategies, investment choices, debt repayment, insurance needs, tax moves, and more. This part is personalized based on what exactly you need and want to achieve.

5. Plan review and implementation

Finally, it’s time to put the plan into action. That might mean setting up automatic transfers, shifting your investment portfolio, tweaking your budget, updating insurance, or connecting with other pros like a CPA or estate planner.

6. Ongoing check-ins (if applicable)

Financial planning isn’t a one-time event. Life changes, and so should your plan. Some people check in with their planner regularly—like every quarter, six months, or a year. Others DIY and revisit their plan every few months.

Is financial planning right for me?

You don’t need to be rich, retired, or about to make a million-dollar decision to benefit from financial planning. If you have goals for your money (or just want to stop feeling anxious about it), you’re already a great candidate.

Still, many people hesitate to start.

Schwab’s 2024 Modern Wealth Survey found that the biggest reasons Americans skip financial planning are:

• 43% think they don’t have enough money
• 25% feel like it’s too complicated
• 15% don’t think they’ve had a life event big enough to require a plan

But here’s the truth: Financial planning isn’t reserved for the wealthy or the ultra-organized. It’s for anyone who wants to feel more prepared for the future.

Financial planning could make sense if:

• You’re a 50-something wondering if you’re really ready to retire
• You’re a new parent trying to budget for day care, college savings, and everything in between
• You’re self-employed with unpredictable income and want a steadier game plan
• You just want to be more intentional with your saving, spending, and investing

One of the biggest misconceptions I’ve heard is when people say they don’t have enough money to work with a financial planner. Financial planning isn’t just for the wealthy; it’s for anyone who wants to make the most of what they have and build a better future. 

If you feel like you don’t have enough, that’s precisely when planning can help the most. A good planner meets you where you are, helps you prioritize, and works with you to create a clear path forward. It’s not about having a certain amount of money; it’s about having a plan.

You can create a basic financial plan on your own, or you can team up with a professional for more guidance and accountability. It depends on how complex your situation is and how confident you feel managing it solo.

Common goals financial planning can help you achieve

Here are some of the most common goals financial planning can help with:

• Saving for retirement. Whether you dream of early retirement or just want to feel secure later on, a plan can help you get there faster.
• Paying down debt faster. From student loans to credit cards, strategic financial planning can help you save thousands in interest.
• Affording a home. Financial planning can help you figure out how much house you can afford—and how to save for it without derailing your other goals.
• Building an emergency fund. Having a cash cushion can turn a crisis into a minor inconvenience.
• Investing with confidence. A good plan matches your investments to your timeline and risk tolerance.
• Leaving a legacy. Whether it’s helping family, donating to causes you care about, or setting up future generations, estate planning is part of the big picture.

How much does financial planning cost?

The cost of financial planning varies, depending on how you choose to work with an advisor. Some planners charge a flat fee for a full financial plan. Others charge by the hour or take a percentage of the assets they manage for you. 

According to Northwestern Mutual, you could pay $1,000 or more per year to work with a financial planning professional when you’re just starting out.

Where to start if you’re interested in financial planning

If you’re curious about financial planning, the best first step is simple: Just start the conversation. Many financial advisors offer a free introductory call to talk through your goals and see whether working together makes sense.

Services like Money Pickle make it even easier by matching you with a vetted advisor for a free, no-pressure 45-minute call. (I tried it myself and was genuinely surprised by how helpful and low-stress the experience was.)

You don’t need to have everything figured out before you reach out. A good advisor can help you define your goals, gather important documents, and build a plan that fits your life.

Here are a few ways to get started:

• Book a free discovery session through a service like Money Pickle.
• Explore advisor options by checking out How to Find a Financial Advisor Online.
• Think about your top goals: What would you love your money to help you do?
• Pull together your financial snapshot: Income, savings, debts, and monthly expenses are a great place to start.

FAQ

What’s the difference between a CFP® and a financial planner?

A financial planner is a general term and doesn’t require specific credentials. A CFP® has completed rigorous education, experience, and ethics requirements and must act in your best interest. Generally, all CFP®s are financial planners, but not all financial planners are CFP®s.

Can I do financial planning on my own?

Yes, many people successfully manage their own financial planning by setting goals, budgeting, saving, and investing. However, if you have complex finances or want personalized advice, working with a financial planner could help you stay on track and avoid costly mistakes.

How often should I meet with a financial planner?

Most people meet with a financial planner at least once a year to review their goals and make updates. If you’re going through major life changes, like a new job, marriage, or retirement, you may want to meet more often to adjust your plan.