How to Prepare Personal Financial Plan in 7 Steps

personal financial plan

When it comes to money, most individuals would love to manage their personal finances so that they achieve maximum satisfaction from their money. To achieve this goal, you must first identify your financial goals and set priorities.

Personal financial planning is the process of managing your finance to achieve maximum satisfaction. A personal financial plan is a written document of personal financial goals with related action plans to achieve them. This implies that every financial goal should be backed by action plans or strategies.

A dream written down with date becomes a goal. A goal broken down into steps become a plan. A plan backed by action makes your dreams come true. – Unknown Author

They said a person who does not plan to succeed is invariably planning to fail. Therefore, if you have no personal financial plan, then it is time to prepare one. This article aims to show you the seven key steps in planning personal finances.
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How to prepare personal financia plan

Steps in Preparing Personal Financial Plan

Whiles individual circumstances may differ, financial planning generally goes through seven key steps:

A. Assessment of Your Current Financial Situation

An essential start of a good personal financial plan is the self-assessment of your current financial situation. It involves creating financial statement for yourself. This can be carried out by preparing a personal income statement and personal net worth statement (balance sheet) at the beginning of the planning.

  • The personal income statement will contain the list of your major sources of income and categories of expenses.
  • personal net worth statement is the total personal assets less the liabilities (money you owed others).

Self-assessment should also consider your social and general economic conditions such as the number of dependents, age, type of job, general inflation, interest rate etc.

B. Set Personal Financial Goals

The next step is to set personal financial goals based on your personal values, social and economic conditions. This should be both the current and future conditions. Note that a good financial goal should be SMART i.e. Specific, Measurable, Attainable, Realistic and Time-based. For example, instead of setting a financial goal of “save more money in 2017” a SMART goal would be “to save D100,000 by 31-Dec-2017”.

C. Identify Possible Action Plans or Strategies

At this step, you will devise possible strategies that will help you to achieve the set financial goals. The strategies or action plans could be self-change, acquisition of additional knowledge and skills, and cooperating with other people and institutions whose support you will need to achieve your goals.

Generally, the action plans can be group into 3 categories for financial planning purpose:

  • Increase your means – anything that could increase your earnings.

  • Stay within your mean – be disciplined with your spending habit.

  • Saving and investing in the right products and on time.

Now, list all the major actions that could help you achieve each goal you set in step 2.

D. Evaluate the alternative action plans

Now that you have identified the possible actions that could help you to achieve your financial goals, the next step is to evaluate each action plan. This will help you select the most suitable option(s). Evaluation can be in a form of pros and cons of each strategy.

E. Select and create the Action Plan

Following the evaluation of the identified options, you should choose one or two action plans for implementation. It also gives you the opportunity to make a decision about which goal to pursue using the evaluation analysis of the possible action plan for each goal.

F. Implement Your Financial Action Plan

A financial plan without implementation is like a building design without actual construction.

Implementation of the action plans is the most challenging part of personal financial management. It is the step where you must work very hard to increase your means and or change yourself. The implementation also includes the use of special tools such as personal budgeting and record keeping. At implementation, you must work to make sure that planned actions are executed.

G. Review and Revise Your Financial Plan

A review is eminent as financial goals may change over time due to change in life circumstances such as marriage, birth, new job etc. Review and revision are needed to reflect the changes so that you can stay on track with the long-term goals. Therefore, your decision about goals and related action plan should not be carved in stone.

The financial review gives you the opportunity to access the success of the selected action plans. If necessary, a new plan can be devised or existing one be adjusted. The review should be done on a periodic basis such as quarterly or monthly depending on the frequency of changes in your financial conditions.


Above all, the success of your personal financial plan depends on the planning and execution process. You need SMART goals with defined action plans. Whiles developing and executing the plan, it is important to consider the risk and return of various products and be flexible.

About Ebrima Sawaneh 118 Articles
My Name is Ebrima. I write about personal finance, small business, and The Gambia to support young people. I am an accountant, banker, and Amazon international bestselling author. Feel free to drop a message or download my free eBooks - HERE read

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