How to Make a Financial Plan

How to make a financial plan

Taking the time to make a financial plan can tremendously help understand your financial situation and greatly improve your financial future. Creating a budget is an important first step in financial planning, but it’s not the only thing you need to do. Therefore, having an understanding of how to make a financial plan is critical. In this article, you will learn all about how to create a financial plan for your future. It includes steps on where to start and details on what to include in your plan.

Financial Planning and Analysis

Every year, it is crucial to take the time to sit down and go through the year’s earnings and spending. Understanding where one’s money is going, how it is being spent, and how it is being invested is essential if one wishes to be in a stable financial position. To help you understand how your money is spent, the monthly spending is displayed with graphed information. From there, striking out unnecessary expenses to have more leftover money to spend.

Start with your income and expenses

Figure out your income and expenses each month, and then use that information to create a budget. You can also use this information to figure out where you need to make changes in order to save money.

Track your progress

Once you have created a budget, be sure to track your progress over time so you can see how your spending has changed. This will help you identify any areas where you may need to make adjustments in your budget.

Make sure you have enough money saved up for emergencies

It’s crazy how in America, less than 50% are able to afford a last-minute $1,000 emergency. An emergency fund should be at least three months’ worth of expenses and should contain at least $1,000. This money can be used to cover unexpected costs or missed rent payments. As you begin to grow older, you should account for more responsibility thereby increasing your emergency fund size.

Repay debt ASAP

If you can pay off your debts faster then they are increasing in interest. That will save you a lot of money in the long run.

Debt Management

Make monthly payments on your debts and make sure you pay off all of them as quickly as possible. It will take some time to pay off all of the debts, but it is important that you do so. If you are not able to bring your debt under control, or if your debt seems to have no end in sight, consider bankruptcy as an option.

Be aware of your spending patterns

Do you spend more money on certain items than others? Start tracking your expenses so that you can see what kind of impact each expenditure has on your overall budget. The goal is for expenditures to be spread throughout the course of a month, with no single item being responsible for too much money spent or resulting in overspending.

Consider using a budgeting software program

There are a number of different programs that can help you keep track of your expenses. It is not necessary to invest in one expensive program for this purpose, but there are some services available for as little as $15 per month that work well in enabling you to plan and track your spending habits. To achieve financial stability, it is important to establish realistic goals, take control of spending habits and develop a budget. A budget can be divided into two main components: an income section and a spending section. The goal of these two sections is to ensure that each can afford the necessities of life while also paying down debt and saving money for future needs or savings.

An “app” is a software program that is downloadable to a smartphone or other mobile device. Apps can be used for a variety of purposes, including accessing information, making purchases, or managing personal finances. Apps such as Money Manager help users monitor their income and expenses and provide charted data that informs users what he/she should be working on in their finances.

Types of Financial Plans.

There are a few different types of financial plans, each with its own benefits and drawbacks. Before you make any decisions. It’s important to understand the different types so you can choose the one that best suits your needs.  Here are the three most common types of financial plans are: 

Budgeting/cost-of-living planning

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This plan is designed to help you save money by figuring out how much money you need each month. So that you are able to live a comfortable life without going into debt. You’ll need to account for all your expenses, including bills, groceries, transportation, and other basic needs. 

Target-date retirement funds

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With this type of plan, you design a funding schedule for your retirement account based on when you want to retire. The fund manager will then create a portfolio that will provide the necessary returns to fund your retirement. Typically, they would provide a compounded interest rate growth chart for illustration to their clients such as the one below.

Personal finance plans


This type of plan helps you manage your finances by setting goals and creating a budget to achieve them. For example, a young couple looking to buy a new 4 bedroom would do whatever it takes for them to save for a downpayment. It is also a good idea to learn to deal with debt and credit problems early on, as well as advice on investing and saving for the future.

Tools to help with your Financial Plans

There are plenty of tools to use to start your financial journey, be it a money tracker app or an investment account. The importance of these tools is to help you get started on your personal finance journey. Here are some tools that can help great benefit


Individual retirement accounts (IRAs) let you place your money into a tax-deferred retirement account. Where investors can set aside money to save for college or to start their own business.

For Singaporeans, our SRS (Supplementary Retirement Scheme) is also a tax-deferred retirement account where we are able to use investment platforms such as Endowus or StashAway to invest our money. If you would like to invest your SRS, do try out these Robo-advisor platforms. Click on the link to read more.

401(k) plans/ CPF

These are employer-sponsored plans that allow employers and employees to contribute to an account on a pre-tax basis. With these accounts, you can typically invest in a mutual fund or other types of investments, such as stocks and bonds. You might also consider taking out loans from a credit union or bank when you don’t have enough money saved up in order to pay off a mortgage. If paying off the loan is more important than paying down the principal of your mortgage, ask for forgiveness of the loan through private mortgage insurance (PMI). This type of coverage protects lenders if borrowers

The Problem with Traditional Financial Planning.

Most people think of a financial plan is something that will help them save for the future or help them make informed decisions about investments. But what happens when you don’t have any money saved or any investment experience? Traditional financial planning can actually be really harmful if you don’t have the right tools to make sound decisions. Here are the problems with relying on traditional financial planning to manage your money:

You Aren’t Given Enough Information

Most financial planners work with clients who already have some money saved and are looking to make larger investments. This means that they’re not always given the best advice when it comes to spending and saving. If you don’t have much money saved, you might be told to spend everything on a new car or house right away. This isn’t always the best decision because it could lead to debt problems down the line.

You Might Be Overpaying for Services

Many financial planners charge high fees for their services. This means that you’re likely spending a lot of money without getting much value in return. For example, you might be paying for advice that’s not specific to your needs, or you might be paying for services that are outdated or not. Traditional financial planning is flawed for a few reasons. First and foremost, it assumes that your current income will stay the same indefinitely. Secondly, it doesn’t take into account the possibility of large expenses coming up that you weren’t expecting. And finally, it doesn’t provide enough guidance on how to save or invest money for long-term goals. If you’re thinking about making a financial plan, you should consider alternatives like budgeting or invest based on your goals and risk tolerance. You can also consult with a professional financial planner to get personalized advice.


Financial planning isn’t something that most people take the time to do. But it’s important, and there are a few things you can do to make it easier on yourself. In this article, I’ve outlined some of the key steps you should take when creating your financial plan, including figuring out what your goals are and identifying how much money you need to reach those goals.

Once you have a good grasp on where you want to go and what kind of lifestyle changes you need to make in order to get there, it’s time to start putting together a budget. There are plenty of online resources available that can help guide you in this process, so be sure to check them out. And finally, once everything is laid out in front of you, don’t forget to take action! Start saving your money now so that by the time your goals are closer than ever. Remember that investing is a long-term financial plan, so stick with your plan and make changes accordingly when needed.

If you would like to know more about how to reach financial planning to reach financial freedom. Do read our other post 7 levels to reach financial freedom. It covers from the start what an individual will need to make changes to first so that he is better prepared to achieve financial freedom.

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