What action should follow the definition of financial goals in financial planning?

Once financial goals have been defined, developing a budget becomes the next logical step in the financial planning process. A budget serves as a financial roadmap that aligns your income and expenses with the financial goals you have set. It helps to ensure that you allocate your resources effectively to meet your savings targets, investment objectives, and any other specific financial aspirations you have identified.

Creating a budget provides clarity on your current financial situation and highlights the areas where you may need to adjust your spending habits to achieve those goals. It facilitates disciplined spending and saving, helping you track your progress regularly, making it easier to stay on course or make necessary adjustments as your financial circumstances change.

In contrast, reviewing current assets might provide insights into your existing financial situation, but it doesn't directly translate those assets into actionable steps toward your goals. Evaluating risk tolerance is crucial later in the process when considering investments, but it comes after establishing a clear financial plan. Implementing the plan is the final stage that follows execution of the budget and other preparatory steps, making it essential to have the budget developed first.