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8 Tips On How to Make a Financial Plan

8 Tips On How to Make a Financial Plan

How To Make A Financial Plan

We all dream about financial stability and being able to spend freely without a care in the world. All this might seem like a dream, but if you work hard enough, it can very well turn into a reality. 

Putting in the effort to make a solid financial plan is on you though, you’ll need to develop that can do mindset. You’re the main person responsible for your own well being, if you want to improve your quality of life a robust financial plan is always a great starting point.

If you’re unsure on how to create a financial plan… continue reading this article to give you some direction. Below, we’re going to be uncovering some tips that you can use upon putting your financial plan together. 

a desk with a financial planner and stationary

Constructing Your Financial Plan

1. Set Your Goals

Where do you see yourself in 10 years? Think about this long and hard, decide on the things that mean the most to you, you want to do, and the things that bring you happiness.  

Your goals could be anything; they could be traveling the world alone, improving your home, upgrading your car, or paying off your student loans. As long as you establish what’s most important, you’ll be able to plan according to reach those goals. 

However, try not to make over-ambitious goals, as these can lead to disappointment. Set goals that you can quickly achieve without being overwhelmed.

2. Analyze Your Spending

Part of making a financial plan is also analysing where all your money goes. Before developing your financial plan, you need to sit down and assess all those spending habits.

Once you’ve done this you’ll be more aware of your spending, and you’ll be able to cut out unnecessary expenditures. For example, if you have an online subscription or a gym membership that you never use, get them cancelled ASAP. 

You can also adopt the help of financial apps and expenditure tracking websites. They can help you record your spending pretty easily and will also help you map expenses and create a budget way of thinking. 

People that overspend come in all shapes and sizes, without proper budgeting you can always spend more than you earn. Therefore, getting into the habit of analysing where your money is going will certainly help you create a better budgeting brain.

3. Focus On Paying Off Your Debts 

If you have any significant debts to consider, the first thing you should be aiming for is to pay them off. 

The sooner you pay off debts like bad credit loans, overdrafts etc. the cheaper it is going to be for you in the long run because interest payments can pile up. Contact the lenders you have the outstanding debts with, and find out how early repayments work with them. If you have multiple debts you could always look into the debt consolidation route as well. 

Creating a good debt-free strategy will help you to navigate around your finances more efficiently, and hopefully move towards being debt-free.

4. Use Excel For Making A Comprehensive Budget Plan

Many of us aren’t aware of the multiple features available in Microsoft Excel and how we can use them for our benefit. 

Through excel, you can easily draft a complete financial spreadsheet that can take into account inflation, and all the other factors to assess. Loads of businesses use Excel for their financial planning, so why can’t you? 

Use excel in making forecasts and discussing your spreadsheet with financial experts to help derive the most value from your investment.

5. Look Into Investments

Investing can risky if you’re already in debt, but calculated investments have a high chance of paying off.  

If this is something you’re thinking of only invest your disposable income (the extra money you don’t use). You could place this cash into stocks, bonds even cryptocurrency projects and then you just need to monitor your investments. Don’t spend money you’ll lose sleep over as there’s a fair chance that you can lose the lot. 

Before you go on your investing quest, make sure you do as much research as you can to minimise risk.

6. Consider Getting a Second Job

If you’re motivated towards your goals but don’t see yourself meeting that timeline, consider looking for a second job. Another income will help you support your expenses and work towards your goals quicker.

The job could be anything, you could offer to babysit during your free time, or you could deliver food or use your car as an Uber.  

someone working out their plans with a coffee

7. Stick to Your Plans

This step is probably the most important. Sticking and committing to your financial plan is a must, as the saying goes – practice makes perfect!

You can make minor changes here and there, this is perfectly normal when your circumstances change. It’s the bigger picture really, avoiding falling back into your old spending habits is the huge test. 

Following the guidelines you’ve set out might be difficult for a few years, but later down the line your future self will be grateful. 

8. Ask for Help

Reach out to someone you know if you need to, there’s no shame in asking for help. Having a friend or family member who is on point with their finances is going to be your best bet. Financial advisors normally charge a lot of money, so having access to someone that could help is a great option to have.