Your 5-step guide to personal financial planning

June 20, 2024

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 personal financial plan.

Financial security isn’t just about finances. Yes, a solid personal financial plan can help you work toward your life goals, whether that’s buying a house, saving for your children’s education or starting a business. But it can also reduce financial anxiety and boost your confidence.

Life is full of change, both positive and negative, but having a financial plan can help you feel prepared to handle evolving and uncertain circumstances as they arise.


Five personal financial planning steps to take

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


1. Assess your financial situation and typical expenses.

The first step is to look at your personal finances and lifestyle. 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 valid. Your initial focus should be on creating an unbiased 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 for nonessential items.

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 expenses, through a spreadsheet, budgeting app or your bank’s online or mobile app, 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 personal 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 personal 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, such as an emergency fund, 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 personal goals through saving and investing.

In general, a savings account is a good approach for your short-term goals, such as travel or an emergency fund. 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 growth. 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 an employer-sponsored retirement 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, which reduces your taxable income.

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.


5. Monitor your progress.

It’s important to regularly review your personal financial plan, as your goals and circumstances will change over time. Set an annual reminder and take some time each year, or when your circumstances change, to review your expenses, budget, financial accounts, estate planning documents and short- and long-term goals to make sure they’re still up to date and working well for you.

If you work with a financial professional, they can also help you identify changes or opportunities that will optimize your financial plan even more.  


Creating a financial plan for yourself now can help set you up for future success. With a little preparation, 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. Learn how we can help you develop a personalized financial plan.

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