Understanding how to make a financial plan is vital if you want to reach your goals and dreams. It’s not simply numbers; it’s about knowing what you value and what matters to you. In this guide, we will cover how to build a financial plan that truly reflects what you want in your life.
The Importance of Planning
Staying organized gives you the space to reflect and determine your priorities. By taking time for reflection, you can link your financial decisions to your values and priorities. This is helping you motivate yourself and stay on track throughout the year.
Why December is the Best Time to Plan
- December is a chance to look back on the year behind you.
- December is a chance to look back on the year behind you. This way you skip all the havoc of January and start the year with clarity.
- It provides the opportunity to be more mindful about intentions and goals.
Reflect on the Past Year
Reflection is the first step to build your financial plan. Spend some time reflecting on what did and didn’t go well in the last year. This is part of how you learn and grow.
Celebrate Your Wins
Acknowledge and celebrate achievements both big and small. These might include sticking to a budget, saving money, or making a financial choice that was in line with your values.
Learn from Challenges
Think about areas of challenge that might inform your path going forward. Self-compassion is key here. Rather than internalising guilt for unmet goals and other desires, honour your efforts and the lessons learned.
Set Intentions for 2025
After reflecting, it’s time to look ahead and set your intentions for the new year. Intentions are about what you want your financial life to feel like.
Emotional Intentions
Consider how you want to feel when it comes to your finances. Do you want to feel more relaxed or less stressed? These emotions can lead your financial decision making.
Practical Intentions
Consider your emotional plans and set realistic intentions around them. If, for example, you want to feel more organized, vow to regularly track your outlay or set up automation for your payments.
Create Your Financial Plan
With your intentions in hand, it’s now time to create a solid financial plan. This plan should fit your life vision for 2025.
Develop a Life Plan
Your life plan is a guide to what you want in your life in the next year. Consider experiences you wish to cultivate, changes you wish to effect. Get them down on paper, however general they seem.
Set Specific Goals
Break down the life plan you’ve created into concrete, measurable goals. For example, if traveling is something you want to do more of, make a goal to save X amount for that trip.
One-Year Spending Plan
What you do need to do is create a one-year spending plan and see how all your different financial goals fit into your overall financial picture. This gives you a clear understanding of your inflows matched with your outflows.
Hands-on Approach: How to Develop Your Budget
- Set out what you want to do with your finances over the coming year.
- Divide each goal into monthly sums to save or spend.
- Tweak your plan accordingly to work for your broader financial picture.
Final Thoughts
If you do this process in December, you can enter January feeling prepared and confident. You are not just collecting numbers; you are creating a life that aligns with your values.
For more tips on managing your finances, check out our blog on setting financial goals or learn how to build an emergency fund. If you’re interested in investing, our guide on types of investments can help you get started.
