Whether you do your own planning or consult with a financial professional, your investment planning should involve the following five basic stages:

Stage one: Set goals and gather data

Gather complete, accurate and current information to determine your current financial picture and realistically assess your ability to meet your financial objectives. Access to the financial data that impact you and your family is crucial if you are to make a sound plan to reach your goals

This information includes:

• Statement of assets and liabilities, prior income tax returns (for at least the previous three years), projected money flow (on a monthly basis) including income and expenses, most recent payroll stubs

• Most recent employee benefit statements and benefit booklets, copies of wills and trust or estate-planning, documents copies of gift tax returns, copies of insurance policies (life, health, disability, homeowners, auto, etc.)

• Trust agreements, copies of any previously prepared financial statements or insurance recommendations

Stage two: Analyze your financial position

The reality test. Do you really have the excess money flow or are you projecting a money shortfall? For example, what are the percentages of individual sources of income to your total income? Review college education expenses or retirement to determine if future adjustments are needed.

Stage three: Select a strategy

Develop a money management plan — a budget. Then build on that foundation to meet your long-term, high-priority goals such as retirement, a child's education, or accumulating wealth through investing. Consider tax deferral and payroll reduction. 

Stage four: Implement the plan

Choose specific investment options to match your risk-tolerance. Select a suitable portfolio based on asset categories and classes.

Stage five: Follow-up

Monitor your action plan annually — are you still meeting your goals? Have your goals changed? Document each review and performance for the key financial areas.

Start today

Today, investing is not simply an activity reserved for wealthy, elite Americans. If you participate in a 403(b), 401(k) or other type of retirement plan, you are an investor. Understanding those plans, and the financial vehicles that drive them, is as important to your financial situation as understanding Wall Street is to tycoons. Following an investment-planning process is the first step on the path to financial independence.

Having the resources to fund tomorrow's goals depends upon your ability to manage your money today. By applying the general principles of money management described here, you will be laying the foundation of a comprehensive personal financial plan.

Remember, the sooner you begin working on your financial plan, the closer you will be to attaining your goals for financial freedom. Take that first step today.