6 Steps to Crafting a Financial Plan to Achieve Your Goals

No one cares quite as much about your financial future as you do, so it’s important to have a plan or a guide so you can stay on track to achieve your goals. I believe this is more critical for women than men because women face a unique set of challenges, not the least of which is the gender wage gap and longer life spans which means we have to do more with less.

While everyone wants to build wealth and become financially independent, everyone’s path will be different, so it’s important to create a plan that fits you — one that prioritizes your goals and how you spend, save, and invest your money to achieve them. You can follow the six steps I’ve outlined below on your own or you can work with a professional. In either case, your input is crucial to design a plan that truly fits you.

Let’s explore six key steps to craft a plan for your financial future.

What is a financial plan?

It’s an organized approach to managing your money to achieve your goals. It details your current money situation, highlights gaps between where you are and where you want to go, and includes a strategy to fill the gap while also planning to overcome obstacles that could slow or derail your plan.

How to make a financial plan

1. Write down your financial goals and your WHY behind them

Some key areas of your life to consider when setting goals in include: financial (prosperity); relationships (family, friends); career (life work); health (vitality); and personal fulfillment (harmony.

Break larger goals down into smaller chunks to avoid getting overwhelmed. For example, if you want to eventually leave your 9 to 5 job and start a business, break the process down into specific milestones such as having a specific amount in savings before you leave or starting your business as a side hustle so you have money coming in as you grow the business.

2. Analyze your current money situation

    • Write down what’s coming in, what’s going out, and where it’s going.
    • Determine how much money you need to pay your fixed expenses like your rent or mortgage, and how much you are spending on items like entertainment that can vary from month to month.
    • List your assets including things like bank accounts, retirement investments, and other savings.
    • Create a budget so that you can take charge of your spending. Include elements in your budget that will lead to your success.
      • If you don’t have an emergency fund – set aside a specific amount each month to cover a few months of expenses
      • If you have debt – create a debt pay-off strategy to eliminate it and include an extra amount to pay off your debts
      • Set aside funds for specific goals such as retirement, a down payment on a house, building wealth, or other goals you might have

3. Plan to invest

Create an investment strategy that puts your money to work for you. Investing is for the long-term, so before you invest have a clear objective or purpose in mind, and only invest money that you will not need in the short term (5 years or less). Get help with this part if you need it but never invest in something you don’t at least have a basic understanding of. It’s your money and you will have to live with the outcome so take some time to understand if it is the right investment for you based on your goal and your time frame.

4. Create a plan to mitigate obstacles

    • Get the right insurance so an unplanned occurrence doesn’t wipe you out
    • Create a retirement plan – determine how much you will need and start investing early (as soon as you get your first paycheck)
    • Create a tax planning strategy so you don’t have to pay more than you are obligated to pay
    • Put basic estate planning documents like a will, power of attorney, and health directive in place so your wishes will be carried out

5. Review your plan frequently

Checking in frequently makes it easier to deal with obstacles that can throw you off track, bounce back from setbacks, and act as a reminder so you can stay on track to accomplish your goals.

6. Stay committed to your plan

Achieving your goals, especially financial independence and building wealth may take some time. You will make mistakes along the way (overspending and getting off track with your budget), and there will likely be some tough times when you want to give up. But resist the urge. If necessary, revisit Step 1 and review your ‘why’ behind your goals.

Learning from your mistakes is key to not repeating them. So, question why you made them and how you can avoid them in the future to help you stay on track to achieve your goals.

Following these six steps will help you create a plan for your future success regardless of where you are starting from. Creating a plan is something you can do on your own, but you don’t have to. At PS Worth, we’re available to answer specific questions, give a second opinion, or create an entire plan for you. Visit our website to learn more. ps!