The first step in personal financial planning is controlling your day-to-day financial affairs so that you can do the things that can help you reach your goals. This is achieved by planning and following a budget. Controlling spending, saving money, and investing for the future are all important aspects of financial planning, but those things mean nothing if you don't have specific goals that you're trying to reach. In order to gauge your financial success, you need to have goals so that you can measure your success. The second step in personal financial planning is choosing and following a course toward long-term financial goals.
It's all about trying to properly manage downside risk (threats - wealth - protection) and upside risk (opportunity - wealth creation). Downside risks would include damage or loss to property, dying too soon, outliving your income or becoming ill or disabled. Upside risk is concerned with maximising opportunities for wealth creation.
