In this lesson you will learn 💸
- How to set-up your personalised financial plan
- How your plan links to your budget and your investments
The moment has finally arrived...it's time to set up your first financial plan! And we'll let you in on a little secret - you've already done the majority of the work over the last few lessons, which means this final step shouldn't be difficult at all!
Your action 📝
Use your notes from previous lessons and the checklist below to put your financial plan together in 5 steps:
- Note down your personal goals for the short-, mid- and long-term.
- Understand your personal situation and see what might be left each month.
- Calculate critical amounts you might need for your emergency fund and your retirement or use the 50-30-20 rule.
- Adjust your monthly budget to factor in monthly contributions for your various 'money pots', e.g. the emergency fund, your retirement and your investments.
- Automate as much as possible. This will help you stick to your plan. Set up standing orders for the amounts you’ve calculated to go into your savings, etc.
Download your financial planning checklist
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Frequently asked questions
How often should I review my financial plan?
Your financial plan is a living document and not carved in stone. You should review it once a year or when things in your life change.
How can I translate my plan into investments?
This is where the magic with the three pots (short-, mid- and long-term) happens:
- The money you put aside for your short-term, you'll keep on a savings account or invest a small portion of it
- You can invest the money that you plan for the next 4-10 years and for your long-term future with an appropriate risk strategy to use the power of time and give it a chance to grow
See module 5 'Investing' for details and handy resources how it all works.