{"id":12311,"date":"2025-12-02T01:27:00","date_gmt":"2025-12-02T07:27:00","guid":{"rendered":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/?p=12311"},"modified":"2026-02-03T13:53:16","modified_gmt":"2026-02-03T19:53:16","slug":"what-is-first-step-financial-planning","status":"publish","type":"post","link":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/what-is-first-step-financial-planning\/","title":{"rendered":"5 steps that can help with your first financial plan"},"content":{"rendered":"\n<p>Whether you\u2019re far along in your career or wondering <a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/how-to-manage-your-first-salary\/\" target=\"_blank\" rel=\"noreferrer noopener\">how to manage your first salary<\/a>, you need a personal financial plan.<\/p>\n\n\n\n<p>\u201cMoney is a resource, and we are stewards of it,\u201d says Wilson Muscadin, financial coach and founder of a personal finance blog. A financial plan, he says, allows you to be thoughtful and proactive about how you use that resource.<\/p>\n\n\n\n<p>Creating a financial plan on your own can seem overwhelming, but like any big project, breaking it down into smaller parts makes it easier to tackle.<\/p>\n\n\n\n<p>So, what is the first step in financial planning? Before we introduce you to the first step of creating a financial plan, let\u2019s explore what a personal financial plan is. Then we\u2019ll explore the remaining four steps to follow as you solidify your plan.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-personal-financial-planning\">What is personal financial planning?<\/h2>\n\n\n\n<p>A personal financial plan is a written overview of your financial situation, combined with strategies to achieve short-, medium- and long-term financial goals in the future, Muscadin says.<\/p>\n\n\n\n<p>\u201cIt\u2019s figuring out where your money is, where it goes and where you want it to go,\u201d says Sophia Bera, CFP<sup>\u00ae<\/sup>, founder of a personal finance blog.<\/p>\n\n\n\n<p>The process of creating a personal financial plan can be broken down into a series of steps. Let\u2019s start with the first step of the financial planning process.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Step 1: Take an inventory of your finances<\/h2>\n\n\n\n<p>What is the first step in financial planning? It\u2019s a fact-finding mission as you take an inventory of your finances.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2120\" height=\"869\" src=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403.jpg\" alt=\"A man looks at his smart phone.\" class=\"wp-image-12355\" srcset=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403.jpg 2120w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403-300x123.jpg 300w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403-780x320.jpg 780w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403-768x315.jpg 768w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403-1536x630.jpg 1536w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_1-INARTICLE-e1646064221403-2048x839.jpg 2048w\" sizes=\"auto, (max-width: 2120px) 100vw, 2120px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>While that can feel intimidating, there are ways of organizing your financial inventory that will make the next steps in financial planning easier, the experts say. To get started, take out some paper or open a document and list out your:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Major assets,<\/strong> such as an estimate of the equity in your home, car, checking accounts, savings accounts, retirement accounts, and investment accounts<\/li>\n\n\n\n<li><strong>Recurring income <\/strong>from your job and any side hustles you do as <a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/4-side-hustles-you-can-do-while-working-full-time\/\" target=\"_blank\" rel=\"noreferrer noopener\">ways to make money on the side<\/a><\/li>\n\n\n\n<li><strong>Debts,<\/strong> such as your mortgage, auto loans, personal loans, student loans, credit card debt, and medical debt<\/li>\n\n\n\n<li><strong>Recurring expenses, <\/strong>such as your utilities, rent, phone bill, subscription services, and any other recurring costs<\/li>\n<\/ul>\n\n\n\n<p>Finding this information can take some digging, Bera says, but it will make your calculations easier in the following steps. You\u2019ll likely need to log in to your various bank accounts, check your latest pay stubs, and review emails and paperwork as you work through each category.<\/p>\n\n\n\n<p>However you decide to gather the information, being detail-oriented at the beginning can pay dividends over time.<\/p>\n\n\n\n<p>\u201cYou don\u2019t have to become a spreadsheet nerd,\u201d Muscadin says. \u201cBut if you\u2019re trying to get a handle on these things, spend more time upfront.\u201d<\/p>\n\n\n\n<p>As you conduct your financial inventory, Bola Sokunbi, who is an author and the founder and CEO of a personal finance platform for women, recommends documenting where you found each piece of information alongside the amounts. Don\u2019t include sensitive information like usernames or passwords, but you can include bank names or URLs to accounts. That way, Sokunbi says, you can more easily reference and update your financial plan in the future.<\/p>\n\n\n\n<p>Once your financial inventory is complete, Bera says you\u2019ll likely see some things pop out right away that you can \u201csimplify, streamline and automate.\u201d<\/p>\n\n\n\n<p>These housekeeping tasks\u2014such as rolling over old 401(k)s into an IRA, automating payments, or taking care of small, lingering debts\u2014will help you organize your finances. Bera recommends doing what you can before moving on because it will help you focus on the big picture as you progress through the next steps in financial planning.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Step 2: Create a net worth statement<\/h2>\n\n\n\n<p>Bera calls the net worth statement the foundation of financial planning because it gives you a concrete number to build from.<\/p>\n\n\n\n<p>Figuring out your net worth boils down to a simple equation: Add up what you own (your assets) and subtract what you owe (your debts). A <a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/net-worth-calculator\/\" target=\"_blank\" rel=\"noreferrer noopener\">net worth calculator<\/a> can help walk you through it, and because you already have these numbers handy (thanks to the first step in creating a personal financial plan), it should be a breeze.<\/p>\n\n\n\n<p>It can be a little nerve-rattling to boil your financial situation down to one figure, but the experts agree that the number itself isn\u2019t the point.<\/p>\n\n\n\n<p>\u201cWhen looking at your net worth, the trajectory from month to month is much more important than the absolute number,\u201d Muscadin says.<\/p>\n\n\n\n<p>Your trajectory won\u2019t be clear to you yet, but it will reveal itself as you move through the steps in financial planning.<\/p>\n\n\n<\/div>\n\n\n<div class=\"mx-auto block-quote block-quote--yellow-circles bg-fixed bg-center bg-no-repeat bg-cover z-0\">\n    <div class=\"block-quote__glow\"><\/div>\n    <blockquote class=\"post--constrain-large\">\n        <p>\u201cYour financial plan is there to help when you have decisions to make. It\u2019s all about giving yourself peace of mind about your finances and knowing that you have a plan for your future self.\u201d<\/p>\n                    <footer class=\"block-quote__source\">Bola Sokunbi, author and founder\/CEO of a personal finance platform for women<\/footer>\n            <\/blockquote>\n<\/div>\n\n\n    <div class=\"post__content\">\n\n\n\n\n<h2 class=\"wp-block-heading\">Step 3: Get a handle on your cashflow<\/h2>\n\n\n\n<p>Your cashflow is the money that flows in and out of your accounts over a given period of time. To understand your cashflow situation, you\u2019ll need to look at your recurring income and expenses (which you already calculated in the first step of the financial planning process). In this step, you\u2019ll also need to factor in your discretionary expenses\u2014what you spend on things like food, entertainment, and clothes.<\/p>\n\n\n\n<p>Most of these types of purchases are made with debit cards, credit cards, and cash. So, to see what your discretionary spending amounts to month over month, you\u2019ll want to consult your debit and credit statements.<\/p>\n\n\n\n<p>Once you subtract the money you\u2019re spending on recurring fixed expenses and discretionary expenses from your total monthly income, you\u2019ll see if you\u2019re cashflow positive or cashflow negative. If you have money left over after all your expenses, you\u2019re cashflow positive. If you\u2019re spending more than you\u2019re bringing in, then you\u2019re cashflow negative.<\/p>\n\n\n\n<p>If you\u2019re cashflow negative each month, then Muscadin suggests it\u2019s time to implement a budget. (He prefers the term \u201ccashflow management plan.\u201d) But even if you\u2019re cashflow positive, there\u2019s likely still room for improvement.<\/p>\n\n\n\n<p>Take a close look at where your money is going and reflect on what you can change to come out more cashflow positive each month. <a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/how-to-be-frugal\/\" target=\"_blank\" rel=\"noreferrer noopener\">Living frugally<\/a> doesn\u2019t have to cramp your style, Muscadin says, if you\u2019re strategic and intentional about the way you spend. Maybe you\u2019re paying for a subscription you don\u2019t use anymore. Or perhaps you could eat healthier and save money by cooking more meals at home.<\/p>\n\n\n\n<p>As you make adjustments and start generating more extra cash each month, you\u2019ll need to decide what to do with it. To do that, you\u2019ll need a clear sense of your financial goals.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Step 4: Set your financial goals<\/h2>\n\n\n\n<p>Muscadin likens setting your financial goals to determining your North Star.<\/p>\n\n\n\n<p>\u201cUltimately, money is not the goal,\u201d he says. \u201cSaving more, investing more, all that is nice, but to what end?\u201d<\/p>\n\n\n\n<p>Wondering <a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/how-to-set-financial-goals-and-crush-them\/\" target=\"_blank\" rel=\"noreferrer noopener\">how to set financial goals<\/a>? To define your goals and why they matter to you, Muscadin offers a simple exercise to help.<\/p>\n\n\n\n<p>Ask yourself: \u201cWhat is my biggest financial goal?\u201d Write down your answer. Then ask yourself <em>why <\/em>that goal is so important to you. Write that down, too, and keep asking yourself that question until you\u2019re crystal clear about the underlying motivation behind the goal.<\/p>\n\n\n\n<p>Muscadin says that this exercise not only helps you define your goals, but it also makes it easier to stick to your financial plan. \u201cWhen the shiny, new object comes along, you can ask yourself, \u2018Does this take me in the direction of my deepest \u2018why\u2019?\u2019\u201d<\/p>\n\n\n\n<p>It\u2019s not enough to have goals, however. You need an action plan to achieve them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Step 5: Make a plan to achieve your goals<\/h2>\n\n\n\n<p>\u201cPlanning is how you meet goals,\u201d Sokunbi says. \u201cIt\u2019s how you build wealth. It\u2019s how you weather a life crisis.\u201d<\/p>\n\n\n\n<p>She emphasizes that while it\u2019s important, it doesn\u2019t have to be complicated. The work you did in the first steps of the financial planning process should reveal many of the actions you need to take to reach your goals. (Working with a certified financial advisor is recommended when creating a financial plan.)&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2120\" height=\"869\" src=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136.jpg\" alt=\"A man holds his daughter while grilling as the mother stands nearby and smiles.\" class=\"wp-image-12352\" srcset=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136.jpg 2120w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136-300x123.jpg 300w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136-780x320.jpg 780w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136-768x315.jpg 768w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136-1536x630.jpg 1536w, https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-content\/uploads\/2022\/02\/What-Is-The-First-Step-In-Financial-Planning-Start-Your-Personal-Finacial-Plan-Today_2-INARTICLE-e1646064474136-2048x839.jpg 2048w\" sizes=\"auto, (max-width: 2120px) 100vw, 2120px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>Sokunbi offers these examples of action items that can go into your personal financial plan:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/5-budgeting-basics\/\" target=\"_blank\" rel=\"noreferrer noopener\">Create a budget<\/a> to generate more savings<\/li>\n\n\n\n<li>Schedule percentage increases to your 401(k) contributions<\/li>\n\n\n\n<li>Contribute to a Roth IRA or Traditional IRA to maximize your retirement savings and tax benefits<\/li>\n\n\n\n<li>Speak to a licensed insurance agent to review your insurance policies and ensure adequate coverage<\/li>\n\n\n\n<li>Find opportunities to increase your income<\/li>\n\n\n\n<li>Work with an expert to create a will and estate plan<\/li>\n<\/ul>\n\n\n\n<p>And if you identified any ways to streamline your finances in the first step but tabled them for later, add those to your list, too.<\/p>\n\n\n\n<p>\u201cYour financial plan is there to help when you have decisions to make,\u201d Sokunbi says. \u201cIt\u2019s all about giving yourself peace of mind about your finances and knowing that you have a plan for your future self.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Make time to regularly revisit your personal financial plan<\/h2>\n\n\n\n<p>The personal finance experts agree that for your financial plan to be effective, you need to carve out time to review it. That\u2019s because as life changes, your goals will change, too, Sokunbi says.<\/p>\n\n\n\n<p>\u201cLife really sneaks up on people, especially in their 30s,\u201d Bera adds. \u201cAll of a sudden, things are more complicated\u2014you\u2019ve got a house, a kid and you\u2019ve changed jobs.\u201d<\/p>\n\n\n\n<p>Bera notes that monthly check-ins can work for some people, but not everyone will see significant progress on a month-to-month basis. If that\u2019s the case for you, schedule a meeting with yourself once a quarter to keep your personal financial plan on track.<\/p>\n\n\n\n<p class=\"disclaimer\">Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.<\/p>\n\n\n\n<p class=\"disclaimer\">The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many people know they need a personal financial plan, but they don\u2019t know where to start. Let the experts guide you step by step.<\/p>\n","protected":false},"author":15,"featured_media":12657,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[17,5681],"tags":[114,34,108,55,111,127,130,104,100,39,49],"class_list":["post-12311","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budgeting","category-getting-started","tag-401k","tag-budgeting","tag-budgeting-basics","tag-financial-goals","tag-financial-plan","tag-how-to","tag-long-term-saving","tag-managing-your-money","tag-quick-tips","tag-saving","tag-spending"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/12311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/comments?post=12311"}],"version-history":[{"count":25,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/12311\/revisions"}],"predecessor-version":[{"id":22573,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/12311\/revisions\/22573"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media\/12657"}],"wp:attachment":[{"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media?parent=12311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/categories?post=12311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.teryrtuytyut.sbs\/online-banking\/banking-topics\/wp-json\/wp\/v2\/tags?post=12311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}