An example of a Personal Financial Plan (done in 5 steps)

If you ever wanted to get your personal finances in order, then you’re reading the right blog post. That’s because you’re about to learn how to create a Simple Personal Finance Plan. I’ll show you how to do it in 5 steps.

By the end of this post, you’ll have an idea or two that will help you create a personal financial plan. Treat it as an example and use it as a guide to create your own. Doing this will help you manage your current financial situation. You’ll be able to start working on your goals immediately by doing the action steps throughout the process.

You’ll also know how to deal with the 3 common financial challenges in personal finance.

So, stick around and get ready to take action right away and be 1-step closer to your financial goals.

Disclaimer: I’m not a licensed financial advisor. The advice in this post is general and for educational purposes only. What worked for my family is not guaranteed to work the same way in your situation. Consider reaching out to a financial advisor if you need professional help with your financial situation.

DISCLOSURE: As an Amazon Associate, I earn from qualifying purchases. This post contains affiliate links which means I receive a commission at no additional cost to you if you click through and make a purchase using those links. See my full Disclaimer here.

What’s a Personal Financial Plan?

I’m so passionate about intentional living so I’m going to put my own spin on the definition of Personal Finance Planning.

From an intentional point of view, Personal Financial Planning is simply paying attention to the information relating to your finances. It’s about making time to reflect on the real-picture of your current financial situation. Then, creating an intentional plan on how to get better with your finances and achieve your money goals.

It’s a strategy of managing your income, increasing your savings, taking control of your expenses, and getting rid of debts as quickly as possible.

If this topic resonates with you, you’ll also benefit from the intentional living and money mindfulness blog posts I’ve previously published. Read the blog posts here, take what resonates and ignore the rest. Then start taking action.

Why do you need to Plan your Personal Finances?

So last year, my husband R financially decided that it was time to let go of his corporate job (which I fully supported).

He left his job in June 2021 and got a new job in December 2021 which was a part-time permanent role in a not-for-profit organisation. A job that’s fully aligned with our values. A role that makes him feel that he’s actually doing something for the community.

But here’s the thing.

The decision of becoming a part-time employee meant both of us are now working part-time. We lost more than half of his salary (by choice), so our total family income has been massively reduced since then.

But…

We didn’t stop eating.

The kids still went to school.

Household bills didn’t disappear.

Surprise expenses still popped up.

One of our kids started High School in January this year, so we had to spend on a new laptop, new uniform, new school essentials and other extras.

And here we are, 9 months in and we’re still doing great with finances.

We’re still living on a cash basis and so far, there was no drastic lifestyle change. All the adjustments were done organically. And we didn’t need to borrow money. If anything, our life has been better. Less stress and more time for things we like to do.

I am not saying this to brag but I just want you to know that when you’re hit with a massive change of circumstances financially, (whether it’s voluntary or not) having a financial plan can save you.

That’s why I wanted to share with you this process.

What do you need to create your Personal Financial Plan?

I’m an advocate of making things simple, easy, and fun so the personal financial plan process I’ll show you doesn’t require anything fancy.

You just need a notebook and a pen. And if you want to save time and make things easier, you can also grab the Personal Finance Planner Printable that you can find in the ieSHOP. Use the code PFPLAN2022 to get 30% discount. Note: If you click here the discount will automatically apply

Aside from the Notebook and a pen or the Personal Financial Planner, you also need to have the following handy.

• Bank Statements (last 3 months is ideal)
• Completed Money Trackers (if you have been tracking your expenses/savings/debts)
• Notes of your previous expenses

If you haven’t been tracking your expenses in the past, that’s ok. You can download the free money trackers below and you can start tracking your finances as soon as you finish reading this blog post.

Ok, ready? 

What to include in your Personal Financial Plan?

Just one more thing before you start the process, Let me suggest what you can include in your Financial Plan. Take note that this is a super simple financial plan so I will only suggest the most basic elements in this financial planning session.

You may  include the following:

• your financial goals (short term and long term goals)
• Your savings (current savings and your savings goal/s)
• Your income and expenses
• Budget Plan or spending plan
• A plan of action so you know what you need to do and focus on moving forward.
• A commitment to make time and pay attention to your personal finances

5 Steps on how to create a Personal Financial Plan

Now that you have your notebook or you Financial Planner handy, let’s begin.

Step 1: Identify what matters to you

Everyone’s values are different so what’s important to you might be different to the other person reading this post. What I value might be different from what matters to you.  So, it’s important to remember in this step that you ONLY NEED to think about YOU. What is it that you value?

Knowing what you value, will help you create meaningful goals. Meaningful goals are backed with the intention which is based on your core values. 

Common core values are Family, Freedom, Health and Wellness, Success, Commitment, Compassion, Growth, Love, Connection, and Wisdom.

Your action Step:

Pick 1 to 3 Core Values from the above examples I mentioned.  You can go to James Clear’s Core Values List if you want more examples of personal core values.

For example, My Family Values are Freedom, Love and Growth.

I know, I know this is not directly related to money but it will make more sense as you go through the process.

Step 2: Get clear with your financial goals

The next step is to get clear and establish your financial goals. And this is why determining your values as the first step makes sense. Those core values are what matter to you.

Your financial goals are not the real goals, the real goals are living those core values.

Thinking this way makes your financial goals more meaningful. Because your goals go beyond the dollar face value.

In addition to that, meaningful goals are more satisfying and rewarding when you achieve them. And they are motivating and inspiring while you’re working on those financial goals.

So how do you make clear and meaningful financial goals?

Your Action Step:

Based on the core values you chose from step 1, think of the financial goals you want to achieve. Consider your long term goals and the short term goals.

Examples of long-term goals might be buying a home or savings for your retirement. Short-term goals can be paying off debt or saving for a travel.

Step 3: Know your numbers

Now that you have your core values and your financial goals aligned. It’s time to start looking at where you are right now.

It’s time to assess your personal financial situation. So in this step, you’re going to get a clear picture of what your numbers are. These are your income, savings, expenses, and debts.

Knowing where you are now will help you create an effective plan to reach your personal financial goals. This will guide you on what’s the next step to take.

No savings? Then you can start planning on how to increase your savings.

Have debts? Depending on what type of debt you have but knowing this will help you create a plan on getting rid of it as soon as you can.

Your Action Step

Take note of your savings. How much do you have right now? How do you feel about it?

Write down your income including the sources.

Then take note of your expenses. This may take a long time but try and make time for this. The intention is to know where your money goes. Knowing where you spend your money will help you realise if there are expenses that are keeping you away from your financial goals.

Managing your numbers is simply paying attention to the numbers of your personal finances. Please note that I’m focusing on super basic personal finance here, so I’m only referring to savings, income, expenses, and debts.

Step 4: Manage your numbers

If you have investments, of course, you need to include them but I won’t include anything about it in this post because I honestly think I am not the right person to talk about it.

Now that I’ve set your expectations, let’s begin looking at your numbers.

It’s helpful to know too that this practice is best done regularly. As part of your normal financial check-in.

Four main categories you need to pay attention to in managing your numbers

Savings

It’s a good idea to start with savings. Are you happy with how much you have in your savings accounts?

Income

It’s important to take note of how much you earn and their sources. Are you happy with the source of your income?

Expenses

You may or may not be aware of where you money goes at the moment, and that’s ok. If you’re not aware of where you spend your money on, I want you know that it’s ok too. However, if you want to get serious about managing your personal finances effectively, you do need to consider establishing awareness.

Awareness will help you know where to make adjustments in terms of spending in order for you to achieve you financial goals faster.

The good thing is when you’re fully aware of your expenses, there will come a time when you won’t need to track your expenses. Things will become easier.

Debts

If you have debts, unless it’s a mortgage, my biggest suggestion is to plan how to get rid of that debt as soon as possible. The time it will take to pay off debt will depend but you just need to make the decision of prioritising debt payments. Now.

For us, in 2010, R had 5-figure credit card debts ( 3 cards combined ). Ouch! We only had one child then. We paid off the debt in less than 3 years on a single and slightly above average wage. When I say this,  it may sound easy but I’m telling you it wasn’t. Lots of sacrifices within reasons.

But the point I want to highlight here is. IT CAN BE DONE. Just start now.

Step 5: Think of strategies to keep your personal finances in order

By now you have a clear picture of your financial situation.

The next step is to think of the best strategies on how to keep your personal finances in order. You can use the list below to help you get started.

• working on your money mindset if your current money mindset is not helpful
• having a spending plan
• starting a peace of mind fund (an account dedicated for those unexpected expenses)
• getting the right and good value insurances (like life, health and car insurances)
• managing your taxes (sorry I’m not able to help you with any of tax-related topics as I’m not the right person for this)
• plan to be debt free

If you don’t know where to start, I suggest checking in with you Money Mindset first. Because you can have all the tools and all other strategies but if you don’t have a positive money mindset, it might be difficult to push through.

In the meantime, I’m going to share the most common challenges when it comes to Personal Finances. And how you can address each of them.

Challenge #1: No savings 

Make a plan on either: decreasing your expenses and directing them to your savings. Or you can find ways to increase your income (but make sure when you do you don’t increase your expenses as well).

Challenge #2: Expenses higher than income or just break even every time you get paid

If your expenses are higher than your income, then it’s time to get serious about looking at ways to decrease the expenses as soon as possible.

This is one of the main reasons why your challenge #1 occurs. It’s because if there’s not much leftover from what you earn, it’s hard to save money. And when you don’t have savings, when life suddenly happens, you might find yourself in debt.

So to address this. The plan is to pay extra attention to where your money goes. And be curious if some expenses can be either removed or at least decreased. 

You’re the only person who will know what expenses you cannot live without. What you value is different to mine so I won’t ever tell you to get rid of your takeaway morning coffee if that’s the only thing that makes your day. (for sure there are other areas of expenses that you can cut back on)

Challenge #3: Debts Payment Struggle

Debt brings all sorts of negative feelings. So, if you have debts, be gentle with yourself. Please do not beat yourself up for having debts.

What matters now is you’re doing something about it. You’re changing your situation for the better. And it starts with YOU making a decision to pay off your debt right NOW.

If you need a little help with keeping a positive mindset, Read the 77 Financial Affirmations to Practise Positive Money Mindset and have a look at the Printable Card Decks on Money Affirmations.

Bonus Tip on Creating a Personal Financial Plan (Review Regularly)

Review…. review ….. review.

Reflect regularly on how your finances are. This is the only way you will know if you’re making progress or not. You’ll know if your plan is working.

Regular review means you can make an immediate change if something is not working. That will save you time and effort.

Plus when you review regularly, it gives you the chance to celebrate small wins. Sometimes we get too caught up on being super-focused on a big goal that we miss the series of small wins that happen before our eyes.

These small wins are so important because they give us instant dopamine hits. Which is so helpful in keeping the momentum. Momentum is what keeps you moving forward so it’s important to hold on to it for as long as you can.

If you’re just starting, Make time for your finances at least once a week.

The Barefoot Investor suggests once a week for the first 6 weeks and then once a month moving forward. But you do what works best for you. Ideally, at the beginning, the more frequent the review the better. And as you become more and more aware of your financial situation, you may find you don’t have to do it as frequently. Just make sure you do it regularly. Regularly could be once a month, once every 3 months or even once a year.

Conclusion

You just learned how to create a Personal Financial Plan in 5 steps. That means you can now put the thoughts into action.

To that end, let’s quickly recap the 5 steps on how to create a Personal Financial Plan

• Identify what truly matters to you
• Get clear with your financial goals
• Know your numbers
• Manage your numbers
• Find strategies that work for you

Another thing I want to point out is the mindset about the approach to all this Money Mindfulness thing.

There are different ways you can plan your finances and it’s up to you. Choose the one that works best for you and I honestly don’t think one is better than the other. The key here is to choose what works best for you and choose a process that will help you in the long run.

Something simple, easy and quick to use.

If you ask me, analog is the way to go. There’s magic in writing things down.

But if you’re not into pen and paper. You can always go digital.

The tools and methods are only useful if it helps you. So choose what you like and what works.

Here’s to your successful Family Finances.

Blog Posts you may like.

Be Intentional With your Money: 5-step to Money Mindfulness

How to Develop a Positive Money Mindset

How to change your Mindset about Money

77 Financial Affirmations to Practise Positive Money Mindset