11 Ideas on How to Make a Personal Financial Plan

how to make a personal financial plan

You might not been where you expected in terms of your personal financial position. It might seem like everything is turned upside down. Your plans for spending and saving money may have taken a detour. If so, you are not alone. Trust me. I know you might be wondering, how do i create a personal financial plan to succeed today?

Let us look into this now.

If you are ready to start looking ahead and create a new personal financial plan, this resource is for you.

By the time you are done reading this, you will be in a good position to take control of what you can and move forward.

Your first step is to set goals which should help you to identify and prioritize:

  • Short-term goals: six months to five years
  • Mid-term goals: five to 10 years
  • Long-term goals: more than 10 years

Make note of the current savings you’ve put toward each. If you’re short of money for a goal, how do you fund that?

11 Ideas on How to Create Your Personal Financial Plan 

The following are some of the ideas, tips, and tricks you can use to create or make your personal financial plan;

  1. Assess your current financial status.
  2. Create a budget and follow it.
  3. Pay your debts.
  4. Plan for your retirement.
  5. Ensure you are organized.
  6. Have an emergency fund.
  7. Review your investment portfolio.
  8. Set a savings goal in percentages, not as an amount.
  9. Streamline your budget.
  10. Get your tax refund as quickly as possible.
  11. Hedge against volatility.

Let us now look further into the above ideas.

How Do I Create a Personal Financial Plan? 

Now that you are here, I know you are keen to improve your personal financial situation.  This will require that you be committed to changing the way you live or do things for the better.

Some of the most important things people focus on are personal financial plan, saving, and investing.

Achieving financial independence is an admirable goal, but very few people know where to start.

If you are starting to take steps towards financial freedom this year, here are tips you should follow to set or create personal financial plans;

  1. Assess Your Current Financial Status

Setting financial goals is crucial, but before you can set any goals, you need to know where you currently are.

Look through your savings, debts, and investments.

Assessing your financial status may feel stressful, but gaining this knowledge will allow you to set realistic goals for the year.

  1. Create a Budget and Follow it.

One of the best things you can do for your finances is set a budget. The budget should be achievable.

Make sure that your housing, food, and utility costs are around what you usually pay.

Now is the perfect time to plan your retirement savings as well.

  1. Pay Your Debts

Debt is a significant burden and can prevent you from achieving your financial dreams.

Start paying off your debts now. Interest is stealing your money from you. If you are making 15% in the stock market, but paying 18% in interest, you’re losing money.

Commit to paying off debts now, and you’ll be able to keep the money that you invest in the future.

  1. Plan for Your Retirement

Retirement is coming, and you should be preparing for it. You need to discover exactly how much you need to retire.

Thankfully, I have a calculator on my website to find the exact number that you need to retire. Knowing your number will help put your savings into perspective.

Planning for retirement is always an excellent financial goal, and the New Year is the best time to focus on it.

  1. Ensure You Are Organized

Setting budgets and goals are great, but these efforts are futile if you do not have a plan to stay on track.

Staying organized is a critical step to meeting your financial goals this year.

There are several tools and budgeting apps out there that can help you remain on track. When it comes to your personal budget, the more organized you are the better.

  1. Have an Emergency Fund

Everyone is vulnerable to unforeseen emergencies. Without proper planning, your budget could fall apart should one arise.

If you haven’t already done so, it’s important to establish an emergency fund. This will protect you if you experience any sort of unexpected emergency without breaking the bank.

Your fund should be at least 2 to 3 months worth of expenses. This fund may take a while to establish, but the personal financial freedom you gain from having it is worth the wait.

  1. Review Your Investment Portfolio

If you are already investing, you are on the right track. However, if you have a financial advisor, you are probably not making the returns that you could be making.

Most advisors will put your money in funds with high fees and high commissions. You need to be aware of where your money is going so you don’t lose it due to lack of knowledge.

  1. Set a Savings Goal in Percentage, not as an Amount

Consider selecting a one-digit number as your regular savings percentage each payday. Too many people focus on amounts, which can be misleading and lock you into an outsize amount when your pay-check size varies.

Instead, decide to put aside 5%, for example, out of each cheque you receive and you will be better able to stick with the plan for the long run.

  1. Streamline Your Budget 

Know what lies ahead, especially if you plan to make any changes to your monthly expenses like purchasing a home, renting an apartment, buying a car, or taking out a student loan.

The point of budgeting is not always to minimise expenses; it’s simply to identify where money comes from and where it goes.

I have covered some of the best budgeting apps that you can consider to help you with this.

After doing that, and only after doing it, will you be able to manipulate various elements of the income and outflow.

Go through each of the ways you spend money and make sure there’s an entry for each one.

Many people fail at budgeting not because they spend too much but simply because they don’t know how much they spend and lose track of their overall finances.

  1. Get Your Tax Refund as Quickly as Possible

If you have money coming to you after you file your tax return, send the forms in via an e-file program as early as possible.

That way, you could have the cash by February. If you plan to owe money to the government, wait until the official filing deadline, or a few days before, to file and pay.

  1. Hedge Against Volatility

For numerous reasons, an year could be a roller-coaster for the stock market.

That is a good reason to purchase silver and gold as a hedge against market uncertainty and potential inflation.

Be careful not to put your entire portfolio into metals, but only about 10%. You do not want to be too much exposed.


Now is a great time to get a little education in investing and start making some changes. You could commit to learning right now and start getting greater returns with less risk than your financial advisor is taking with your money right now.

What do you want to achieve? Consider your financial goals and start taking the steps to achieve them now.

Make it easier for yourself by creating a twelve-month financial plan.

Celebrate each win, no matter how big or how small, and you will notice how much more fun it becomes to do something that you initially thought would be ‘work’.

Whether you start this in January, or put the planner into use halfway through the year, the promises and challenges will work for you and help get you focused on the financial success you have been striving for.

In whatever you decide, I hope that the above tips and ideas will help you to create a personal financial plan that will work for you.

Frequently Asked Questions

What is a personal financial plan?

A personal financial plan is a documented analysis of your personal finances, including your earnings, liabilities, assets, and investments.

Its purpose is to help you assess the feasibility of your personal goals and to understand the steps that you will need to take – money-wise – to accomplish them.

What does a personal financial plan look like?

A financial plan is a comprehensive picture of your current finances, your financial goals and any strategies you have set to achieve those goals.

Good financial planning should include details about your cash flow, savings, debt, investments, insurance and any other elements of your financial life.

What are the steps for developing a personal financial plan?

The following personal financial planning process is a logical process. You can use these six steps in developing a personal financial plan:

  • Determining your current financial situation.
  • Developing financial goals.
  • Identifying alternative courses of action.
  • Evaluating alternatives.
  • Creating and implementing a financial action plan.
  • Re-evaluating and revising the plan.

What are the components of a financial plan?

A good financial plan contains the following seven key components:

  • Budgeting and taxes.
  • Managing liquidity, or ready access to cash.
  • Financing large purchases.
  • Managing your risk.
  • Investing your money.
  • Planning for retirement and the transfer of your wealth.
  • Communication and record keeping.