Optimistic Financial Planning – An 8 Step Guide

I believe there are three key things that are essential to building a solid financial life. The first is a good attitude and relationship with money, the second is financial planning and the third is good money management, also known as a budget plan. While I will talk later about budgeting here on the blog and in our newsletter community, today I want to talk about financial planning, for which I also created a free template.

The reason I chose this is because financial planning is an important part between money mindset and money management. You can’t create a true budget if you don’t have a plan for your finances. On the other hand, a financial plan is something that can motivate your mind throughout the journey.

And finally, the new year is still fresh. Therefore, it’s a good idea to prepare with financial planning, especially with my simple free template.

But before we start planning, let’s take a look at some important questions.

What is financial planning?

Quite simply, financial planning is a plan combined with a strategy to get from your current financial status quo (A) to your future financial goal (B). And it all depends on your financial capabilities, your income, expenses and your net worth.

In other words, if you’re married now, living in a rental apartment, and want to have kids and your own home after 5 years, financial planning is key to figuring out how to make that happen.

As you start planning your finances, you may find that this goal seems impossible for the next 5 years based on your current financial situation.

Financial planning is nothing more than organizing and managing your financial resources to achieve financial goals and achieve long-term financial security.

And that brings us to the next question: How can financial planning help you?

4 ways financial planning can help you + free template 

We all know that we should save and invest money. But when it comes to making this happen, we are divided between those who plan and those who don’t.

• If you don’t plan, you end up saving money at random, just when you have some left over, hoping things will get better soon.
• When you plan, you already know what you’re saving for, how much, when, and how long it will take to reach your goals.

If you belong to the first group, don’t worry, you are not alone. Since this may not really be helpful in solving your financial problems, I’ll give you 4 reasons why financial planning can be helpful for you, and even better if you use my free template. 

1. You can increase your self-confidence with financial planning.

If your financial situation is not in good shape, you may feel ashamed and uncertain about your future.

Financial planning is a great way to get out of this trap and instead increase your financial confidence. With a plan by your side, you will feel stable and hopeful.

And here’s why: With a written financial plan, you have a measurable goal to work towards. Because you can track your progress, you can reduce doubts or uncertainties about your decisions and make adjustments to overcome obstacles that could derail you.

👉 Read more: Stop Financial Insecurity: A Guide to a Healthy Relationship with Money

2. With a financial plan you can save even a small amount of money.

The most commonly cited reason for not having a plan is “I don’t have enough money.” This is a misunderstanding.

As I keep saying and repeating: You don’t have to wait until you have more money to start planning your finances.

Instead, you should start financial planning right now, regardless of what your situation is. Why? Because you don’t need a lot of money to plan small steps.

In fact, financial planning can especially help you if you have a low income by learning to improve your saving and budgeting habits. A written plan helps you prioritize your goals and gives you a way to measure your success.

3. A financial plan can help you build an investment portfolio.

Financial planning gives you a comprehensive overview of your future: what goals you want to achieve, how much time you need and how you can deal with risks. With this in mind, you can determine how you want to achieve each goal.

This includes both saving – setting aside money that you need in the short term or for emergencies – and investing, i.e. setting aside money that you need in the long term and that can ideally grow. And with your financial plan as a roadmap, you’ll be in a better position to make well-considered investment decisions – instead of going out without direction and just hoping for the best.

4. Develop better money habits through financial planning.

Financial planning is not just about saving and investing, but also about becoming self-confident, gaining security and improving your quality of life. Above all, the right insurance and an emergency fund are fundamental components of your financial well-being. By planning, you’ll learn to create new, supportive money habits.

Now that you know the why and the what, let’s get into the steps for your financial planning and don’t forget to grab your free template.

👉 Read more: 5 Powerful Habits to Change Your Finances

8 steps in financial planning + free template

Financial planning involves analyzing your income, expenses, assets and liabilities to develop a comprehensive financial strategy.

There are three steps to this end: determining your current financial position, mapping out your future state, and then creating a plan to get you from the present to the future.

I wrote an article about how you can analyze your current financial situation: How to calculate your net worth. If you want to do this first, check out the article and then come back here.

Let’s get started with financial planning now and don’t forget to download the free template straight to your inbox.

1. Set financial goals.

Good financial planning is based on your financial goals. If you approach your financial planning from the perspective of what your money can do for you—whether it’s your dream vacation, buying a home, or wanting to retire early—you’ll save more consciously.

Keep your financial goals inspiring. 

Ask yourself:

• What should my life look like in five years?
• What will it look like in 10 and 20 years?
• Do I want to own a car or a house?
• Do I want to be debt-free?
• Do I have children?
• How do I imagine my life in retirement?

Concrete goals make it easier for you to identify and implement the next steps. Your goals are your guide.

When you use the free template for your financial planning, you can write down your long-term, medium-term and short-term goals, but it is used to create a plan for your annual goal. Also formulate your monthly goals as smaller steps in between. Do this first because the next steps will give you ideas for what you can do each month.

2. Track your money.

Get a picture of your monthly cash flow – what comes in and goes out.

Once you know your income and expenses, you’ll get ideas on how you can put more toward your savings and debt repayments. Because when you know where your money is going, your financial planning becomes easier and you can define your goals accordingly.

For example, developing a budget is a typical immediate plan. Paying down credit card or other high-interest debt is a common medium-term plan, and planning for retirement is a typical long-term plan.

Creating a financial cash flow plan, also called a budget plan, can be one of your first monthly goals on the free template.

👉 Read more: The Art of Saving: How much money should you save per month and which budgeting method is best?

3. Have a budget for emergencies.

The foundation of all good financial planning is setting aside money for emergencies. You can start small – 1.000 euros is enough to cover small emergencies and repairs, so an unexpected bill doesn’t mean you have to take on new or additional debt. Your next goal might be basic living expenses for a month, and so on.

If you use the free financial planning template, this could be another step on your list.

👉 Read more: Create an Emergency Fund Easily Without Feeling Overwhelmed

4. Deal with high-interest debt.

A crucial step in any financial plan: Pay off high-interest debts like your overdraft, credit card debt, short-term loans, title loans, and installment loans. The interest rates on some of these loans can be so high that you end up paying back many times more of the amount you borrowed.

If you’re struggling with different debts, consolidating all of your debt can help you combine multiple expenses into one monthly bill at a lower interest rate.

👉 Read more: Breaking Free: Get Out Of Debt In 7 Steps

5. Plan your retirement.

Early and ongoing financial planning is crucial to ensuring a comfortable and financially stable retirement. The earlier you start planning, the better prepared you can be for future needs. You can do this by starting to prepare for your retirement today, whether by creating retirement savings plans such as retirement accounts, individual retirement plans, or other long-term savings strategies.

You don’t have to do most of it now, but you should at least start planning. And this could be a helpful goal on your financial planning list for next year.

6. Invest to achieve your future goals.

Investing may sound like something for rich people or for people who have established themselves in their careers and families. It is not. Investing can be as simple as putting money into a savings account or as easy as opening an investment account yourself (many have no minimum amount to get started and are free, too). With good financial planning, you can start investing today with a small amount.

If you use the free template, researching and learning about investing could be a monthly goal.

7. Increase your financial well-being.

Taking each of these steps above will protect you from financial setbacks. If you can afford it and with the ongoing learning process, decide if you want to do more, such as:

• Increase the amounts you invest in an additional retirement account.
• Fill up your emergency fund until you can cover three to six months of living expenses.
• Use insurance to protect your financial stability so that a car accident or illness doesn’t derail you. Life insurance protects relatives who rely on your income.
• Expand your career, find a part-time job or start your own side hustle that can also help you become financially independent.

8. Estate Planning: Protect your financial well-being.

Although it might not be on your agenda now, because you are young, financial planning also means paying attention to your future needs and planning things for your loved ones. By creating a will, you can ensure that your assets are distributed according to your wishes. Other types of estate planning documents can also provide your loved ones with clarity about how you want to be cared for and who should manage your affairs.

Start your financial planning today + use the free template

There is no trick or anything difficult when it comes to financial planning (especially if you want to use my free template). The only thing is, it’s a good idea to get started as it can help both boost your financial confidence and grow your money.

And both are the key to a life you love.

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