Financial planning. It also sounds like something that’s only available to moneyed c-level executives who love spreadsheets — at least from how it’s being described. But here’s the thing: Financial planning isn’t just for the well to do; it’s for all who want to find relief from paycheck-to-paycheck stress and the overwhelming reassurance that they’re making progress toward reaching practically any life goal, big or small.
If you have ever wondered, “Where does all my money go?” or “How will I ever be able to buy a house/retire/go on my dream vacation?” —this guide is for you. In the next few minutes, you’ll have a clear and actionable understanding of what financial planning is, why it matters, and how to begin a plan of your own — even if you’ve never done it!
What is Financial Planning?
At its root, personal finance is really just having a plan for your money.
This is not only a budgeting exercise or an exercise in saving money (although it is those things). A good financial plan covers:
Your income and expenses
Debt management
Emergency funds
Investments
Insurance
Retirement planning
Financial goals
Think of it as an itinerary for your freedom road trip.
1: Define Your Financial Goals
Every proposal will begin with a goal. So, what are we trying to accomplish here?
It could be:
Paying off student loans
How to create a 90-day emergency fund
Buying your first home
Starting a business
Retiring by 55
Taking a year off to travel
Not just, “I want to be rich.” Get specific. Establish smart goals: Specific, Measurable, Achievable, Relevant, and Time-bound.
Example: “Save $10,000 for a house down payment over 24 months by saving $420 a month.”
Once your goals are well defined, the path to achieving them becomes clear as well.
Step 2: Assess Your Current Financial Picture
You can’t plan your trip until you know where you’re starting from. And let’s answer the following question: Grab a pen or open a spreadsheet and answer:
How much do I earn each month (after tax)?
What are my steady costs (rent, car payments, insurance)?
How much do I spend on fluctuating expenses like food, eating out and subscriptions?
How much debt do I have?
Be honest with yourself. It’s not about judgment — it’s about clarity.
Step 3: Build a Budget You Can Stick To
Now that you know what comes in and goes out, get hold of the reins.
There’s a simple rule the 50/30/20 rule, for example:
needs (home, bills, groceries) 50%
30% for wants (entertainment, eating out)
20% for savings/pay off of debt
Or go all zero-based budget — every single dollar has a job to do, even if the job is “fun money” or “future travel fund.”
The key is not perfection. It’s awareness and intention. Budgeting is not about denying yourself; it’s about giving your money purpose.
Step 4: Establish an Emergency Fund
Life happens. Your car breaks down. You lose your job. The dog eats something strange and has to have a visit to the expensive vet.
That’s where your emergency fund comes in. Work on building up 3–6 months of living expenses in a high-yield savings account instead.
Start small: $500. Then $1,000. Then 1 month of expenses.
Step 5: Pay Down Debt Strategically
Not all debt is bad — but high-interest debt can be a slow, silent killer of financial goals.
Two common debts repayment strategies:
Snowball method: Pay the smallest debt first for an early win.
Avalanche method: Paying off the highest interest rate debt first will help you save the most money in the long run.
Regardless of which one you pick, the key is to have A plan and stick to it. Don’t cringe, send the minimums and pray for the best.
“Invest in a Low-Cost Fund Because History Tells Us You’ll Make 7% a Year Going Forward” (Yes, Even Now, With the World Falling Apart), recommends Ron Lieber.
The only problem is that in the meantime, you’re losing money to inflation. When you invest, your money grows.
Start with:
401(k) through your job (particularly if there’s a match!)
Roth or Traditional IRA
Low-cost index funds or ETFs
You don’t have to pick individual stocks or time the market. Just get started in a small way and maintain. Even $50 a month adds up with the power of compounding.
Pro tip: Automate your investments the way you do with your savings.
Step 6: Guard What You’re Making
Insurance isn’t fun, but it’s necessary:
Insurance for health to secure your financials during medical contingencies
Renter’s or homeowner’s insurance to save your stuff
Life insurance if you have dependents
Disability insurance to protect from the inability to work because of illness or injury
Consider insurance the safety net under the great balance sheet of your life.
Step 7: Constantly Review and Adjusting your Own Plan
Life changes. So, too should your financial plan. Simply report in at least yearly (after major life changes — marriage, new job, baby, etc.).
Ask:
Are my goals still the same?
Am I getting enough in savings and investments?
Should I change my budget or boost my emergency fund?
Feel free to revise your plan. Flexibility is strength.
Final Thoughts: You Don’t Have to Be Perfect — Just Be Consistent
Financial planning is not about being good with money. It’s about being mindful about it.
Remember:
Know your goals
Track your money
Make a plan
Adjust when life changes
That’s from $100 to $10,000, you — your time, your ability to save, your education — are the most potent financial tool you’ve got.