How do I Make a Personal Finance Plan?

In order to make a personal finance plan, it is important to get a very clear picture of one's present finances, then develop a list of financial goals for the future, and finally develop a plan of action to achieve those goals. Getting a clear picture of one's present finances means calculating all of one's debt and assessing all of one's resources and investments. For those who have debt, one of the most important parts of a personal finance plan is developing a system through which that debt will be paid off through regular payments. For all people developing a personal finance plan, it is important to develop a feasible monthly budget that has built-in calculations to help them achieve their financial goals.

When developing a personal finance plan, it is also important to assess one's level of comfort with risk. It is possible to get a great return on investments if one is willing to take risks, but there is also the possibility for losing money on such investments. Those who are less comfortable with risk can put their money in high-yield savings accounts. Doing so will not allow for the same kinds of dramatic returns that are possible with risky investments, but it is much more secure. Savings and investments are an important part of achieving many financial goals, so it is important to figure out how much one can save on a monthly basis as part of developing a personal finance plan.

An important part of developing a personal finance plan is developing a plan that is feasible and practical. Be realistic about the amount of money that is needed on a monthly basis for necessities such as food, clothing, shelter, transportation, and utilities. Also, it is important to include at least a little bit of wiggle room for fun and social activities. But use the exercise of making a monthly budget to find out ways to save money by doing things like finding a better cell phone plan or reducing the number of premium channels on one's cable subscription.

When developing financial goals, consider short-term, long-term, and mid-term goals and tailor the personal finance plan to meet those goals. For example, include a line in the monthly budget to pay off a credit card with a relatively low balance in just a few months. At the same time, one should also plan for financial goals years and decades in the future.