Skip to main content

Create your own financial plan in 7 simple steps

Read time
8 min.

What do you want for tomorrow? In five years? Ten years?

A financial plan helps you to create order. It provides you with security, increases your ability to react to the unexpected, and helps you to achieve your goals.

Life is unpredictable. It surprises you over and over again. Sometimes this is good - and sometimes less so.

Life events likely to happen

Even though everyone’s life is unique, there are certain events that are very likely to happen for you: starting further education, changing your job, becoming a parent, marriage, divorce, losing your partner, retiring, health setbacks and more. Not even an economist can predict your future. But whatever awaits you, creating a financial plan can help you to prepare for big life events, to achieve your goals, and to cope better with shocks and even major misfortunes like the coronavirus crisis we all face today.

When you’re creating your financial plan, don’t start with money – begin with your life: your goals, hopes and wishes.

What do you want?

  • Do you want more security?
  • Do you want a new job?
  • Do you want to create a special experience?
  • Will you buy a house or start a family?
  • Do you hope to be your own boss one day?
  • Will you get divorced? Are you worried about your future?

Why financial planning is important for women

Financial planning is a particular concern for women because we tend to have more reasonably predictable key life events that need special financial consideration. The UK’s Chartered Insurance Institute describes these as:

  • ​​​​​​Studying and education
  • Entering and re-entering the workplace
  • Getting married or divorced
  • Becoming a mother or carer
  • Retirement
  • Ill health and death

 

Although our personal experiences of these events will differ greatly, they all represent financial challenges.

Some facts from Switzerland:

When is a good time to create a financial plan?

It’s always a good time to create a financial plan – and if you already have one, it’s always good to check it. Creating this plan can help you give structure to your financial situation, reduce uncertainty and expand your options, allowing you to react more quickly.

7 steps for creating your own financial plan

01

Set personal goals:

What do you want to achieve in the very short term (e.g. in one year), in the medium term (the next 3-5 years), and in the long term (in 10 years or more)? What will change over these periods? A simple list, listing and grouping your short, medium, and long-term goals will do. Make a rough estimate of how much money you need for each goal. Keep a record of these figures.

02

Understand your current financial situation:

take a look at your cash flow; you can determine it partly from your tax return, if you complete one yourself. Ask yourself: what do I have today in terms of assets, and how does my income compare to my expenses? Have my expenses changed? Can I expect any big changes in my income? In the current situation it can also help to imagine different scenarios, for instance if you lose your job. Thinking realistically about the possibilities helps you to avoid surprises. There are tools you can use to help, like a budget app or most e-banking applications. If you have a partner, it's best to discuss all this together.

03

Prepare or check your retirement and emergency funds:

ask yourself how much security you need. How much money do you have available for emergencies? What do you need to put aside for retirement? How much money you’ll need in later life depends on factors like income, lifestyle, etc. Most banks and insurance providers offer a pension planning tool to make rough calculations.

04

Look at the different ways you might achieve your goals:

this could include building up savings in one place (or several) to prepare for the future, staggering goals, etc.

05

Create and adjust a monthly budget:

this should include all your essential outgoings, e.g. monthly contributions to your emergency fund, pension savings/investments, and everything that you might spend for up to 10 years+ in the future. Consider investing as a possibility, rather than just saving - even in uncertain times, investments can work for you if they are cheap, long-term and diversified.

06

Automate everything 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.

07

Review your plan regularly – at least once a year:

it helps if you put this in your diary as a must-do.

It can help to think of your financial plan they way you might about a fitness plan. You might feel lazy and want to avoid getting started – but once you do, you'll feel much better!

The most important thing is to make sure that your plan reflects your personal goals. Right now, it might be very easy to give in to the general uncertainty. Nobody knows what the future will bring, but we all have the option to decide for ourselves whether to swim with the current or take responsibility for our own lives (within the bounds of what’s possible for us).

Your financial plan is a building block for constructing your own self-determination. Take control!

This article has been produced in partnership with watson, a Swiss news platform. 

Here is the link to the original blog article in German.

Congratulations! You finished this article.

Upcoming events

  • Nachhaltig Anlegen mit kleinen Beträgen

    Möglichkeiten und die besten Tools!
    Workshop für ETH Alumni. Anmeldung offen.

  • How to become a trusted financial advisor of choice for women?

    For financial professionals who wish to strengthen their strategy and customer experience for female clients.

  • Woman sitting at desk

    Monthly Money Q&A for members

    Your money questions answered live by experts.