How To Create A Custom Financial Plan That Fits Your Life And Needs

Even if you’re not crazy about money or taking risks, you probably think about money more than you’d like to admit. There’s rent, kids to feed, and suddenly your car needs an expensive fix. By the end of the month, there’s nothing left to do the things you really want to do. What you really need is a financial plan that fits your life and needs.

It might sound a bit scary or boring, but as I will show you, creating your own financial plan will not only take away the stress but can also be a lot of fun. When you see that a few simple changes can free up money for the things you truly care about, sticking to the plan becomes easy, and making more changes becomes exciting.

Understanding Why Money Matters To You Is The Key To Success

The key to a successful financial plan starts with a simple question: Why does money matter to me? Understanding why money is important helps you figure out what you truly care about, and that’s the foundation for creating a financial plan that suits your unique needs.

For example, think about when you visit the doctor. They don’t prescribe the same medicine to every patient. First, they ask what’s wrong to find the right treatment. The same idea applies to financial plans. Knowing why money matters to you helps examine your financial situation, and only then can you create a plan that works for you.

Someone saving to travel the world and someone aiming for a secure pension will likely have very different money plans. One might invest in an RV while the other focuses on a solid pension fund. Understanding why you value money also helps you see if your time aligns with your values.

If you value money for the freedom to spend time with family but you spend weekends working on your personal brand and interrupting family dinners, it’s worth questioning if you’re living by your values.

Set Flexible Financial Goals To Shape Your Future

Now that you’ve figured out why money matters, it’s time to set some goals to shape your financial future. Look back 20 years – could you have guessed that free apps like Skype or WhatsApp would make your phone bills way cheaper? The future is full of surprises. Your financial plan and the goals that come with it should be flexible to handle these unexpected changes.

To kick off setting your goals, realize that predicting the future isn’t always doable. Think of financial planning like planning a vacation – even though you have some goals like places to visit or things to do, leave some space for the unexpected. If it’s storming outside, you can’t enjoy a bike ride and a picnic, so change your plan and visit a museum instead.

It’s the same with financial planning. Your goals aren’t stuck in place, so feel free to adjust them if you go off track. Imagine one of your goals is to pay off a $40,000 student loan in 3 years. Suddenly, a financial crisis hits, and you can’t save as much as you planned. Instead of sticking to the original plan, you could readjust and aim to pay off $28,000 in the same time.

Once you accept that the future is unpredictable, start jotting down some goals. Whatever your goals, remember you can always change them as your situation changes. Your values and goals act as your compass for your financial journey.

Understand Where You Currently Stand Financially

But before you can decide what steps to take, you’ve got to know where you currently stand financially. Getting a clear picture of what you own and owe helps you move toward your goals. If you don’t know your financial situation, how can you figure out what you need to do to get where you want to be?

To grasp your current financial state, make a simple balance sheet. Draw a T shape on paper. List your assets like investments and savings on the left and your liabilities like mortgage and debts on the right. Subtract your liabilities from your assets to find your net worth. Write that above the T.

Once everything’s laid out, you’ll see where you stand and can plan your first steps. For instance, if you find you owe $5,000 in student loans, your first move might be making a plan to pay them off.

Understanding your financial situation not only guides your next steps but also eases financial stress. Imagine not being able to pay your mortgage and avoiding creditors for weeks. When you finally make that call, you learn what you owe and can create a sensible plan.

Or you might discover you owe a lot on a rarely used car. Selling it could get you closer to being debt free.

Make Budgeting Fun With Games And Challenges

Now that you understand the basics of setting up a financial plan, let’s create a budget. In simple terms, budgeting means taking a close look at how you spend money and making changes to reach your financial goals. To budget well, you must know where your money goes and if it matches your goals and values.

Many people find budgeting and tracking expenses boring, like a punishment for those lacking discipline. But the truth is financial success often depends on budgeting well. For example, if your goal is to travel more but you spend 30% of your income on parties and fancy dining, affording a trip becomes tough. You’ll need to make changes to turn this dream into reality.

Start by listing your fixed monthly expenses and look for places to cut or shift costs. Treat it like a game or challenge. Make a conscious effort to spend less – ride your bike to work instead of using public transport, pack sandwiches for lunch instead of eating out, skip the movies and explore your neighborhood.

Every 2 months, tally up your successful days. Another challenge is to make as few transactions as possible in a week. If you have a partner, compete against each other. If you tend to impulse buy books on Amazon, leave your virtual card for a few days and see if you still want those books.

These challenges are not just fun – they help you adjust your spending habits, showing what you truly need to spend money on and what’s unnecessary. Contrary to common advice, rules like saving a specific percentage of your income each month might not be very helpful for reaching your financial goals. Just like your financial plan is unique to you, your savings plan should be too.

The aim is to save as much as you can, and that amount depends on your individual situation. Once you figure out how much you can save, make life easier by setting up automatic savings. Let’s say you can save $300 a month – by automating it, you spend less time deciding whether to spend or save. You might even forget about it and be happy to see your savings grow years later.

Focus On Paying Off Debts First

Along with saving, focus on paying off debts, especially the ones with the highest interest rates. Paying off debts is like investing in your financial future. If you’re building up credit card debt for things that don’t match your goals, you’re ensuring you’ll be busy paying interest later instead of saving for what you really want to do.

Essentially, you’re saying no to your goals and yes to something else. If that something else is important, you might need to rethink your goals.

Treat Investing Like A Science To Avoid Costly Mistakes

Now you know where your money comes from, how you spend it, and you have a plan to pay off your debts. The last step in your financial plan is to explore investments. There are countless businesses and opportunities promising returns if you invest money, so how do you decide where to put your money?

Should you listen to friends or finance people on TV? You could, but then you’d be speculating rather than investing. Real investing means using your head, not just your gut feelings, to make smart investments. Treat it like a science. A good way to avoid mistakes is by checking out academic journals and other reliable sources about investing.

People have been trying to make their money grow for a long time, and experts have been studying it for years. Predicting how a stock will do in the future is complicated, and intuition alone won’t help you figure it out. Before investing, study like a scientist, or you might regret your decisions later.

Besides treating investing like a science, reduce risk by diversifying your portfolio. By spreading it over different types of stocks, there’s no single stock that guarantees wealth. And even if there were, you can’t rely on finding it. Who could have predicted Facebook’s success when it first went public? With the 2008 financial crisis, instead of searching for a miracle stock, spread your risk across many sectors.

Some might lose value, but others might gain, balancing out potential losses. Your portfolio should be diverse, including national and international companies in various sectors. This gives you the best chance of making a profit and reaching your financial goals.


Creating a financial plan tailored to your unique situation doesn’t have to be scary or boring. By understanding what matters most to you financially and setting flexible goals, you can shape your financial future in a way that fits your values and lifestyle.

Making budgeting a fun challenge, paying off high-interest debts first, and using smart investment strategies will put you on the path to financial freedom. With some effort spent now on intentional planning, you’ll reduce future money stress and have more resources for what matters most.