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Financial Planning

Turn goals into a practical plan for saving, investing and protecting your money.

By Fountain Finances Editorial TeamUpdated

A plan connects today to tomorrow

Financial planning is the process of setting goals and organizing your money to reach them. It connects the everyday — your budget and spending — with the long term: a home, your children’s education, retirement. You do not need a large income or a professional advisor to start. You need clear goals and a system.

The building blocks of a financial plan

  1. Goals: write down what you want in one, five and twenty-plus years, with a cost and a date for each.
  2. Cash flow: a budget that shows how much you can direct toward goals each month.
  3. Safety net: an emergency fund of three to six months of essential expenses.
  4. Debt strategy: a plan to eliminate high-interest debt. See debt management.
  5. Retirement saving: workplace plans such as a 401(k), especially up to any employer match, plus IRAs.
  6. Protection: health, disability, life, property and liability insurance.
  7. Estate basics: beneficiaries on accounts, a will and, where needed, powers of attorney.

Put numbers to your goals

Use the investment growth calculator to see what regular contributions could grow to in today’s dollars, and the compound interest calculator to compare savings rates. Working backward from a goal’s cost and deadline gives you a monthly savings target.

Learn the process

Our financial planning guide for beginners walks through each step with examples. For investing basics, the SEC’s Investor.gov offers free, unbiased education.

Frequently asked questions

What are the steps of financial planning?

Set clear goals, understand your current finances, build a budget and emergency fund, manage debt, save and invest for long-term goals, protect yourself with insurance, and review the plan at least once a year.

Do I need a financial advisor?

Many people can build a solid basic plan themselves. An advisor can help with complex situations such as business ownership, large inheritances or tax planning. If you hire one, ask how they are paid and whether they act as a fiduciary.

How often should I review my financial plan?

At least once a year and after major life events such as a new job, marriage, a child, a move or a large purchase.

Part of our Personal Finance hub and our complete personal finance guide. Read our editorial standards.

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