22 February 2021
Four simple steps to create a financial plan you can stick to
It’s never too late to set yourself a goal for the year. Although 2021 is in full swing, now is as good a time as ever to begin setting yourself some financial goals.
This article will provide you with the tools to create your own financial plan to last the year.
How to make a financial plan
1. Consider your savings goals
Before you begin creating your financial plan, you need to set yourself some goals. Whether you’re saving for a car, a lavish post-pandemic holiday, or even just a rainy day fund, you’ll want to set yourself a savings goal. If you’re saving to buy your first house, take a read of our guide on how much you really need to save.
Think about how much you need to save and work out how much you can put aside each month. Savings goals need to be realistic, so don’t leave yourself too much to save with too little time. Make sure to set a goal that you feel you can achieve.
You can set up savings goals in the Principality Building Society ‘Your Account’ section. This feature makes it easy to check up and follow your goals alongside your savings account.
2. Set yourself budgets
Once you’ve identified your financial goals and worked out how much you’d like to save each month, you can start setting yourself budgets.
Many people opt for monthly budgets, but weekly or bi-weekly budgets might suit your lifestyle better - choose the plan that works best for you.
The easiest way to set yourself budgets is to make a note of your income, and subtract all of your outgoings such as your rent or mortgage, bills, tax and subscriptions. Then split your remaining disposable income into buckets.
When setting yourself budgets, try to think about the things you spend your money on that you could cut down on. If you have a habit of spending your money on filling your wardrobe, you might choose to limit your clothes shopping bucket to £50 a month, or if a takeaway is your guilty pleasure, limit yourself to one per month.
3. Don’t forget to budget for other necessities
While budgeting for insurance is never at the top of anyone's list, it’s a necessity if you own a car, home, pet, phone or any items of high value.
Similarly, regardless of your age you should factor pension payments into your budget and try to set aside as much as you possibly can. It’s never too early to begin planning for later life.
4. Check in on your financial plan regularly
Once you’ve made a financial plan, it’s important to stick with it and revisit frequently in order to get the most benefit from it.
You will also want to review your financial plan occasionally and update it if your circumstances change. If you have had a change in income, outgoings or your goals have changed, then adjust your plan accordingly.
Some months you may encounter obstacles to your goals and budgets and it’s important to account for these in your financial plan. If your boiler breaks unexpectedly and you need to have it replaced, you may not be able to save the same amount as you would in normal months. This is understandable, but make sure you pencil it into your financial plan.
Tips to stick to your goals
While there is no one-size-fits all approach to sticking to your goals, here’s a few tips you can follow to keep you on track:
- Tell your family or friends about your goals and plans. You might find that having other people check in on your progress spurs you on
- Break your big yearly goal into smaller goals throughout the year. This can make the task seem more manageable.
- Make sure to reward yourself as you go, by allowing yourself little treats when you reach important milestones.
- Prepare for small setbacks and don’t let them demotivate you.
Seeing your plan through until the end of the year will leave you feeling rewarded, and you might have even exceeded your financial goals too.
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