Part of our Build your own financial plan series

Photo of a man working on a computer.

A step-by-step guide to build a personal financial plan

When it comes to your money and your plans, it can be hard to balance short-term wants, long-term dreams, and those unexpected events that out of your control.

From the groceries you need, to the retirement you want, and the car repair bill that’s looming, it can be hard to figure out how to tackle bills at the same time you plan for the future.

This series of how-to articles can help. It takes you step-by-step through what you need to know to create a personal financial plan and help get your money in order. In nine steps, you have a nice framework to build on throughout your life.

It’s OK if you’ve already started a few of these steps. It’s also OK if you haven’t. Just start with one task and keep going. (Or just tackle the whole thing on a long, rainy weekend with a big pot of coffee and a dog at your feet.)

Let’s get started.

Set financial goals.

It’s always good to have a clear idea of why you’re saving your hard-earned money. Think it through using our financial goals worksheet (PDF).

Create a budget.

Consider this your monthly cash flow and savings/investing plan. Give yourself permission to decide where and how to send your money with our budgeting worksheet (PDF).

Plan for taxes.

It can go a long way toward helping you keep more of your money next year. Our tax planning worksheet (PDF) will help you think through potential income tax credits and deductions.

Build an emergency fund.

All the planning in the world won’t help if life throws you a curveball and you’re not prepared financially. That’s where an emergency fund comes in handy. Our quiz will help you decide when to use these savings.

Manage debt.

Understanding and managing debt is a key part of creating a financial plan. Use our debt management worksheet (PDF) to log your numbers and find the right balance.

Protect with insurance.

Life can change in an instant. People with a good financial plan hope for the best, but plan for the unexpected. Insurance helps with that. Use our disability and life insurance worksheet (PDF) to log your coverage and identify any gaps.

Plan for retirement.

Even if it’s a long way off, think about what you want your money to do for you when you retire, and create a plan to make it happen. Our retirement savings checklist (PDF) will help.

Invest beyond your 401(k).

To reach your mid- and long-term goals, take your savings strategy and put an engine behind it. That’s what investing can do.

Create an estate plan.

You don’t have to be wealthy, old, married, or a parent to need an estate plan, which also lays out who makes financial and health care decisions for you if you can’t make them yourself.

Finished? Here’s when you should review your financial plan.

Take a fresh look at least once a year or after a big life change:

Graphic of a thumbtack. Tip: Around age 50, you may want to include long-term care insurance and expand your plan to add income in retirement.

Next steps

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.