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Planning Beginner: Create a Financial Action Plan--Keep It Simple

Introduction to Create a Financial Action Plan--Keep It Simple What Is a Financial Action Plan and Why Does It Help to Have One? Steps Involved in Writing a Simple Financial Action Plan A Sample Financial Action Plan Getting Help to Write a Financial Action Plan Summary of Create a Financial Action Plan--Keep It Simple
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Steps Involved in Writing a Simple Financial Action Plan

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Steps Involved in Writing a Simple Financial Action Plan

No two financial action plans are the same. They differ based on how complex your needs are and how much of your life plans you want to cover. Traditionally, financial plans have a certain structure:

  • Setting goals and gathering financial data. This includes your income, insurance, any investments, your benefits at work, and of course, your life’s goals.
  • Assessing your financial status. This is where calculations and financial statements come into play. For example, a net worth statement will add up your assets and subtract your liabilities to give you your financial status.
  • Developing the actual plan. This step is how your plan will be carried out. It will include recommended savings and investments and other means of generating wealth.
  • Carrying out the plan. Here, you will actually do the saving and investing; or a professional will do it for you.
  • Monitoring the plan. Your plan must be reviewed periodically to make sure it is on track. If necessary, it can (and usually will be) revised.

Though this may look intimidating, it’s not a requirement. A financial action plan can be as simple as listing each goal and then listing a means of achieving each one:

  • Setting goals. Write down the things you want to achieve.
  • Developing the plan. Set a simple task list.
  • Carrying out the plan. Do the tasks and mark them as done when they are done.
  • Monitoring the plan. Set a reminder on a calendar or an app to see how you are doing.

A note about writing goals: it’s not enough to say something like "I want to have some extra spending money." Goals like this fail because they are not specific; to really work, they should specify three things:

  • What the goal is
  • How much money is needed for it
  • When the goal is to be achieved

In our example, we should say, "I want to save an extra $40 at the end of every month to spend on what I want." That is not only specific, but it can be measured at the end of every month. Of course, it should also be realistic and attainable.