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Personal Financial Plan Template – How To Create A Personal Financial Plan:

Are you ready to make-over your financial future?  The first step is to create a personal financial plan. 

Financial plans are the key to being successful with your money.  When you have an individual financial plan it helps keep you and your money organized.

Do you dream of the day when you have enough money at the end of your paycheck to purchase that pair of shoes you’ve been eyeing?  Do you dream a bit bigger and think about your actually adding money to your retirement account every month.

Having a personal financial plan will make all of this possible.

I know, it sounds kind of scary, but I’m going to walk you through writing a 5-year financial plan.

A five-year financial plan is a great way to get started when you are doing your first financial plan.  It is simple enough to not overwhelm you, but it really helps you start thinking about your future.

PS.  You don’t have to stop at the 5-year mark!

I used to do these long-complicated life plans that included every single aspect of my financial life.  I quickly realized that it was overkill.

When your financial plans are too complicated you lose focus and quite frankly, they just don’t happen.

Now my personal financial plan is super simple. I’ve designed my financial template to focus exclusively on the areas that will give you the most bang for your buck.

The Best Personal Financial Plans Focus On These Five Areas:

  • Increasing Your Personal Net Worth
  • Reducing Your Debt
  • Building Your Emergency Savings
  • Saving For Retirement – I use Top Return Financial
  • Creating Short-Term Savings Goals

How To Create Your Financial Plan Goals

Depending on your goals, you may want to add additional areas to track.  For example, if you have kids, you may want to include a section for college funds.  

Once you have chosen the 5-10 areas you would like to concentrate your financial energy towards it is time to review your current situation and then set goals.

Every year, I sit down and calculate my current value in each area. I review my net worth, check on my debt and savings accounts and then use those numbers as my starting point.

Once you have reviewed your current situation it is time to set goals. This is my favorite part of the whole process.  The trick is to make sure that you have the whole picture before you get started.

For example, if you don’t include all of your debt, then all of your numbers are going to be off.

Keep in mind that you will also want to have your budget (I use a percentage-based budget) handy when you start setting goals.  It is great to dream big and set a goal of putting $500 per month in your emergency fund, but if you don’t have the money in your budget, then you’ve just wasted a lot of time.

To set your goals, I recommend breaking everything down into 1 year, 5 years, 10 years, 20 years & 30 years chunks of time.

I’ve gone over how to do this in more detail below.

If you want to learn how to create a personal financial plan you are welcome to download my
Free Personal Financial Plan Template
. This download has a simple financial plan sample that you can use to write your own plan.

If you still aren’t sold on creating a financial plan, check out this post – 6 Advantages of Personal Financial Planning. 

Personal Financial Plan Example

Here is a sample of what I do for each of the 5 areas mentioned above:

Personal financial plan example - Emergency Fund

This personal financial plan example is for my emergency fund and shows how I set up my goals.

I’m currently underfunded and only have $9,500 in my emergency fund.  My goal is to be at $15,000 by the end of the year.  The difference is $5,500 which means I need to save $1,374 per quarter to hit my end of year goal.

You need to go through the same process for your net worth goals, debt reduction, retirement and whatever short-term goals you’ve chosen.

My personal financial plan template will make it easy for you to quickly visualize the changes you’ll need to incorporate into your budget to hit your goals.

As I mentioned above though, when you make your goals, make sure that they will actually work within your current budget.

How To Calculating Your Personal Net Worth

Your personal net worth is calculated by adding up all of your assets and then subtracting your liabilities.  It should look similar to this (but with numbers):

Personal financial plan example - Net Worth Calculation

To calculate your net worth, write down all of your current assets.  I include anything that is valued at over $3,000.  I don’t stress about the small things in my home.

For example, I personally don’t include computers, jewelry, guns, camera’s and other medium priced items when I create a personal financial plan.  It isn’t worth the time.

The important thing is to make sure that you correctly value your assets.  Just because you love your car doesn’t mean that it is in excellent condition on Kelly Bluebook.

Be realistic.

Your goal is to get an accurate value of your net worth, not an inflated valuation based on the original price of an item.

Once you have determined your net worth, it is time to set some personal financial goals.

If you have a negative net worth, I would focus on debt reduction to get the most bang for your buck.

If you have a positive net worth, then review your assets to see where you have holes.  For example, if you have a lean emergency fund, you may want to prioritize your emergency fund this year and then next year focus on retirement planning and short-term saving goals.

Personal Financial Plan:  Debt Reduction Goals

If you have already calculated your net worth, you should have your total debt easily available.

Hopefully, this number won’t shock you too much.

Even if it is a low number, I highly recommend focusing on debt reduction (after funding your retirement accounts).  The sooner you have debt out of your life the happier you are going to be.

If you have debt, I recommend taking a second step and calculating how much money you are paying in interest every month.

If you are like most people, this number is going to shock you.  When we first got married we were paying $1,975 per month on interest.  Crazy huh!

One of the reasons I love financial planning so much is the emphasis on tracking your net worth.  When you are constantly tracking your net worth it is really hard to ignore your debt.

If you need help reducing your debt check out these posts:

Personal Financial Plan: Money Saving Goals

Saving money is the second best thing about developing a personal financial plan.  Depending on your financial goals you’ll want to break down your money saving goals into some of the following areas:

  • Emergency fund
  • Retirement saving
  • Short-term goals
    • Vacation
    • Vehicles
    • Home Downpayment
  • College Funds
  • Major upcoming personal expense

Your goal at this point is to really personalize this part of your financial plan.

Ask yourself how much money you want to have in your emergency fund, look at your retirement goals.  Review your short-term goals.  Will you need a car soon?  Do you have tuition costs coming up?  Do you want to purchase a home?

This is the part of the financial plan where you want to give yourself room to dream.

I know it sounds counterproductive, but if you want to hit your goals, you need to dream big.  Really think about where you want to be financially in 5-10 years.

Are you saving enough money to achieve your goals?

My top priority in my financial plan is always my emergency fund.  I like to keep 3-6 months in my emergency fund account at all times.  Once that is funded then I begin working on my retirement and then begin funding my short-term goals.

For example, my husband and I have three paid for vehicles, but all of them have over 200,000 miles.  It is just a matter of time until one of them needs to be replaced, so this is my number one short-term savings goal right now.

Related Post:  Why it pays to run your cars into the ground

Financial Plan Examples:

Let’s look at a financial plan example to help you visualize the process:

Personal Financial Plan Example #1

Judy is a 34-year-old woman with 3 kids and a monthly net income of $5,500.  Her current net worth is -$25,000 as a result of some major student loans.  She believes that if she tightens her budgets and stops contributing to her emergency fund for 18 months she can pay off her student loans.

This means that she would be putting $1,388 per month towards debt for 18 months and then once she paid everything off would refocus on her savings goals which include college funds for her kids.

Over the next 18 months, her net worth would gradually increase as she paid down her debt.

Personal Financial Plan Example #2

Maurine & Jim are 53 & 54 with 3 grown children and a monthly net income of $4,200.  They recently paid off all their debt and have a net worth of $230,000.  They are super excited to be debt-free, but concerned because they have no money set aside for retirement.

Because they are so close to retirement age, they would most likely choose to focus all of their extra income on savings related goals.  They would focus on building up an emergency fund and then throw all of their extra cash on retirement planning.

How To Visualize Your Financial Plan

Obviously, your financial situation is completely different from my examples above.  The trick is to sit down and look at your entire financial picture.

Carefully review your debt levels, budget, and net worth and then start planning out the next couple of years.

Your goal is to visualize where you want to be and then calculate the money you will need to achieve your goals.  In some cases, this may be relatively easy.  In other cases, you may need to make some major financial changes to achieve your goals.

Keep your personal financial plan template simple:

I love personal finance and have literally hundreds of spreadsheets on my computer detailing every aspect of our financial life.  They are great, but I always find myself coming back to the basics when I’m creating my 5-year personal financial plan and goals each year.

As much as I want to include every minor variable that may happen in my life, it doesn’t work.  By focusing my financial planning on these five areas, I’ve found that I can focus my energy on specific financial goals that I know will have a huge impact on my ability to generate additional wealth.

Take a few minutes and download my
Personal Financial Plan Example
.  If you don’t have time to fill it out now, set a reminder on your phone or Pin this link.  It is totally dorky, but trust me, this really is worthy of setting a phone reminder for.

Once you fill out the personal financial plan template, pin it up in your office or on your fridge to remind you of your goals.

Creating a personal financial plan really can be life-changing!

Use my financial plan example forms to jump-start your financial goals.  It is amazing how quickly you can begin to save money and get out of debt when you have created a workable plan with actionable steps.

I’ve always budgeted, tried to save money and get out of debt.  It wasn’t until I created my own financial plan example and started actively setting goals that I really started getting traction with my money.

Don’t make the same mistake I did – create a financial plan today!

I should mention that all of this is tied to the fact that you have to create a budget.  You can make all the goals in the world, but unless you are including your financial goals in your budget and actively working towards them every month you won’t succeed.

If you need help with your budgeting I highly recommend this book.  It is seriously my favorite budgeting book.

I’ve also written those budget-related posts that may help:

PS.  If you are struggling to control your spending check out my new class – How to Find and Eliminate Spending Leaks In Your Budget.

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