Your 4-step guide to financial planning

April 21, 2023

No matter what life stage you’re in, it’s always a good idea to assess and work toward your goals. Here’s a step-by-step guide to creating a personalized financial plan.

There’s a good chance one of your goals right now is to feel more financially secure. According to a U.S. Bank Women and Wealth Insights Study, 72% of women and 50% of men say financial security is a “main motivator” to create wealth.

But here’s the good news: having a financial plan can help you feel more confident about your financial future and better prepare you to handle evolving and uncertain circumstances as they arise.

Use this step-by-step financial planning guide to become more engaged with your finances now and into the future.


1. Assess your financial situation and typical expenses

An important first step is to take stock of your current financial situation. Even if you’re not where you’d like to be, be honest with yourself about the income you’re currently generating, savings you’ve accumulated and your general spending habits.

You may feel proud of your progress or notice room for improvement – and both reactions are perfectly acceptable. Your initial focus should be on creating a non-biased assessment of what your financial life looks like now, so that you can make good decisions about how to take the next steps.

To get a realistic idea of your spending habits, add up your typical monthly expenses. These might include rent or mortgage, transportation costs or car payments, groceries, gym memberships, cable or streaming subscriptions, loan payments and discretionary costs – like ordering takeout or shopping.

Reviewing your paychecks, monthly bills, bank statements and even recent receipts in your wallet can be helpful resources as you reflect on your income and expenses. Once you start tracking your expenses, you’ll have a good idea of what the next few months will look like as well. Taking this approach offers a snapshot of your overall financial habits without the stress of retracing and calculating years of your financial history.


2. Set your financial goals

Next, take time to picture what you want out of life as you identify your financial goals. These will be different for everyone, but examples include home ownership, travel, philanthropy, and retirement. You may find it beneficial to add a “why” to each of your goals. Doing so can make it easier to stay motivated as you work toward achieving them.

Consider setting up “buckets” or categories for each of your goals, whether you have two or ten. If you currently have savings, distribute the amount you feel comfortable with toward each category. You might want to start by putting more money toward immediate or short-term goals, as you’ll have time to contribute money to your long-term goals more gradually.


3. Create a plan that reflects the present and future

Your snapshot of monthly income and expenses will help you know precisely where your money is going. This will give you an objective idea of your fixed expenses, like rent or loan repayment, and your lifestyle expenses, like groceries and entertainment. It will also illuminate where you can make changes and ultimately, how much you can put toward your short- and long-term goals.

When making your budget, the key is to be honest with yourself about your lifestyle, values and goals. Whether you’re comfortable now or still trying to make ends meet, it’s important to be realistic about how much you can really save.

Finally, don’t forget to add some fun in to the mix. Trying to deprive yourself of anything but the essentials can be frustrating and potentially unattainable. However you decide to budget, keep in mind that what’s right for you won’t necessarily be right for someone else.


4. Fund your goals through saving and investing

In general, a savings account is a good approach for your short-term goals, like a vacation. Investing is the way to go for your long-term goals, like retirement.

Even if you’re just starting out in your career or don’t have large pool of money set aside yet, it’s never too early to invest. There’s an investment strategy for every financial situation, and investing can allow your money to grow over time through compound interest. The earlier you start, the longer your investments have to compound and the greater the impact.

The easiest way to start investing is to take advantage of a workplace savings plan, if you have access to one. Some employers offer a 401(k) match up to a certain amount. Plus, contributions are directly withdrawn from your paycheck with pre-tax dollars.

If you’re a first-time investor, remember that the process will be a valuable learning experience. Holding onto your investments through market highs and lows can be a good strategy, so remember to practice patience and stay informed.

Creating a financial plan now can help set you up for future success. As you earn more money, you’ll know exactly where it should go. With a little planning, budgeting and consistency, you’ll be well on your way to a financial life that aligns with your dreams and goals.


When it comes to financial planning and guidance for key moments in your life, you don’t have to go it alone. Read about times you may need a financial advisor.


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