Personal Financial Planner Step-By-step

Do you also struggle to make your ends meet like I did, and our fellow Americans do?
Let me tell you guys, planning your finances is not just about surviving until your next paycheque; it is about creating a financially secure future for you and your loved ones.
I have answered all the questions that came to my mind when I first started my financial planning. They were pretty much “general to all,” but… you might have some other questions that are not mentioned in this post. NO PROBLEM!!! Comment them to me, and I will do my best to answer them.

What Is Financial Planning?

So, what exactly is financial planning? Let me break it down for you.

It involves setting financial goals, managing your income and expenses, saving, investing, and planning for future needs like retirement.

According to Charles Schwab, 96% of people with written goals achieve their financial objectives.

Key Components of Financial Planning:

Budgeting: The core purpose of creating a budget is to ensure you spend less than you earn.

Savings: The money saved by following your budget builds a financial cushion for emergencies and future needs.

Investing: After building your emergency fund, invest your hard-earned money to benefit from compounding—via stocks, bonds, or high-interest savings accounts.

Debt Management: Carrying debt is normal—it can be paid off with the right strategy.

Insurance: Protecting yourself and your family is crucial. Insurance covers unexpected costs from hospitals, accidents, and more.

Setting Financial Goals

We all want a lot—from a new pair of socks to a big house—and that list keeps growing, right?

Focusing on one thing at a time through goal-setting keeps you on track and helps you reach your goals faster.

Just like I did, you can use the S.M.A.R.T. framework (Specific, Measurable, Achievable, Relevant, Time-bound). It’s a proven way to achieve your goals.

Budgeting

Budgeting is the backbone of financial planning. It helps you allocate your money wisely to meet needs and wants. Here’s how to build your own budget:

Have a clear goal.
Calculate your income.
Track your expenses.
Categorize your spending.
Follow the 50/30/20 rule.
Monitor and adjust regularly.

Building an Emergency Fund

Remember the saying, “Save for a rainy day”? That means saving for life’s unexpected events—medical bills, car repairs, or job loss.

According to the CFPB, aim to save 3–6 months of living expenses.

Here are my savings strategies you can try too:

High-yield savings accounts (HYSA): Shop around for the best rates.
Automate your savings: I started with $5 per paycheck. It seems small, but it helped me build a habit. You can increase the amount over time.
Challenge yourself: Try saving consistently for 4 weeks. Gradually increase your timeline to build a long-term habit.

Debt Management

I know the weight of debt. Trust me, it’s heavy—but manageable.

Avoid More Debt: Before spending, ask yourself, “Is this a need or a want?” Stick to needs until your debts are gone.
Extra Income Stream: I drove Uber after restaurant shifts to clear my debt. A side hustle can make a huge difference.

Two Proven Debt Strategies:

Avalanche Method: List debts from highest to lowest interest. Pay more on the highest, and minimums on the rest. Once one is paid off, move down the list.
Snowball Method (My Favorite): List your debts from smallest to largest. Pay off the smallest first for quick wins that build motivation.

Investing

This is the fun part!

Do you know Robert Kiyosaki? Of course, you do. In Rich Dad Poor Dad, he teaches:

“Buy more things that put money in your pocket instead of things that take money out.”

Investing isn’t just for the wealthy—anyone with basic knowledge can get started.

Here are some simple definitions:

Stocks: Own part of a company by buying shares. Higher risk, but potentially higher returns.
Bonds: Lend money to governments or companies and earn interest over time. Lower risk and steady returns.
Real Estate: Invest in properties for rental income and long-term appreciation.

Retirement Planning

I watched my grandparents live on a “freedom budget.” You’ll want that too—and it requires planning now.

Start saving early, because compound interest and time are your best friends.

According to a Bankrate survey, most American adults regret not saving enough for retirement.

Don’t let that be you.

Insurance

Life is unpredictable. Insurance protects you and your loved ones from financial setbacks.

Types of essential insurance include:

Health Insurance: Covers major medical costs. You pay only a fraction.
Life Insurance: Pays a large sum to your beneficiaries when you pass away.
Homeowners Insurance: Covers damage or loss to your home and possessions.
Auto and Disability Insurance: Protect against vehicle damage and income loss from injury or illness.

Reviewing and Adjusting Your Plan

A financial plan is not a “set it and forget it” deal. Life changes—and so should your plan.

Regularly review your financial goals, income, and expenses, and adjust as needed.

Conclusion

In my opinion, financial freedom isn’t about how much you earn—it’s about how well you manage what you earn.

Take control of your finances, and watch your savings grow.

Remember: Knowledge is useless until it’s put to work.

The key to success? Start—and start now.