Budgeting · April 08, 2021

Creating a Personal Financial Plan That Reflects Your Goals

When you're creating a personal financial plan, it's easy to get distracted by a neighbor's fancy car, a friend's recent home purchase or a coworker's designer wardrobe and imagine you should spend money on those things, too. But your plan should be about what you want to do with your financial resources—often, copying your peers' expenditures might not be right for you. 

Trying to keep up with the Joneses is ultimately unfulfilling and could cause you to lose sight of your own needs. Rather than borrowing from your friends' playbooks, aim to craft a financial plan that's unique to you.

Find the goals that matter to you

The first step is to identify some goals that you really care about. You could use a note-taking app, or get out a dry erase board or a big sheet of paper, and get ready to brainstorm. Try listing all the goals you can think of, then circle the ones that are most important to you and truly reflect your values.

To spark your creativity, here are a few questions:

  • If you were totally free from the expectations of others, what goals would you pursue?
  • Which goals would show who you really are, deep down?
  • Which goals would you feel proud to work toward and accomplish?
  • Which goals would have a lasting, positive impact on your life?

If you're finding it difficult to avoid comparisons with others, try switching up your perspective. Imagine that you're giving advice to someone who has less life experience than you do and who's asking for your help with choosing meaningful goals. What goals would you recommend they set for themselves?

Take action

After you set goals, the next step is to come up with a plan to achieve them.

Trying to pursue several goals at once might not be practical, so first, it helps to narrow them down. It may also help to rank your goals in order from most crucial to least. Then, choose a couple of the most important goals to focus on first. You may want to select one long-term goal and one short-term goal to start out. For example, your long-term goal could be to save up for a down payment on a house, while your more immediate goal might be to make a donation to a charity you support.

Now it's time to create a budget and include saving for your goals along with your other expenses. Be realistic about how much money you can afford to dedicate to your goals. Suppose you want to make a $100 donation to a charity. You could take $100 out of your earnings one month, but if you're used to spending the money on other things, it may be difficult to redirect that entire amount. Saving $25 each month for four months might be more doable.

Avoid the temptation to dip into the money you've dedicated to your goals, which would undermine your progress. Keeping the money that's intended for a goal separate from your other funds can help remind you that it needs to be used only for the purpose you decided on. Consider opening a new savings account and using it exclusively for a particular goal.

Stay the course

Once you have your plan, giving yourself a reminder of your motivation can help you stick to it. You might write down why you chose the goals that you did, or you could record an audio note or a video of yourself talking about your goals. Revisiting your notes every now and then will keep your reasoning fresh in your mind.

Remember that pursuing your goals doesn't have to be all or nothing. You may occasionally want to buy something that your peers have, even if it doesn't directly contribute to your goals. It's good if your budget has some wiggle room for you to splurge sometimes, as long as it doesn't become a habit.

Letting go of others' expectations may seem challenging at first. But as you gain confidence with creating a personal financial plan and setting your own individualized goals, you'll find yourself worrying less about what your friends might think of your finances and focusing more on your own priorities. After all, your financial plan needs to be tailored to you—not to your friends or neighbors.


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