How To Create a Realistic Financial Plan (That You’ll Actually Stick To)

Do you have a financial plan?

I know how easy it can be to get stressed out by money. Whether you’re trying to save more, pay off debt, or just feel a little more in control, the idea of creating a financial plan might sound overwhelming or even impossible.

I get it.

But here’s what I’ve learned: You don’t need a complicated spreadsheet or a finance degree to get your money on track. You just need a real plan that actually works for your life – and that you can stick to.

Whether you want to just stop living paycheck to paycheck or if you are thinking about retirement, a financial plan can be so helpful!

In this article, I’m going to help you create a financial plan you can actually do. It doesn’t matter if it’s January or July; if you’re starting over or just need a reset. These steps will help you take control of your finances, reduce money stress, and start making progress toward your goals.

Best Ways To Create a Realistic Financial Plan

So, what is a financial plan?

A financial plan is like a map for your money. It helps you figure out where you are, where you want to go, and how to get there. That might mean making a budget, saving for something important (like a house or retiring early), paying off debt, or even starting a business. It doesn’t have to be complicated, and the goal is to build a plan that fits your life.

Here’s how you can build a real financial plan that fits your life.

1. Reflect on where you are right now

Before setting any new financial goals or trying to build a plan, it’s so important to know where you currently stand. This is like taking a picture of your money situation – not to judge yourself, but to better understand what’s going on in your life.

I think this is important because most people do not realize what’s actually going on in their financial life if they just guess everything – actually diving into it is what you need to do in order to better understand it.

I recommend that you ask yourself questions like:

• How much do I have in checking and savings?
• What are my current debts? (student loans, credit cards, mortgage, car loans, etc.) Actually write these down to the exact penny!
• What are my average monthly expenses?
• What did I feel good about financially last year?
• What felt stressful or like it wasn’t working?

This is a great time to open your bank and credit card statements, pull out a notebook, and do a bit of reflection. I personally love using the Empower app to get a quick overview of everything – your spending trends, net worth, and where your money is going.

Even if you feel like your finances are messy, don’t skip this step because this will help guide your next moves.

Quick tip: I recommend checking out Empower (formerly known as Personal Capital) if you are interested in gaining control of your financial situation. Empower allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more, and it is FREE.

2. Set real financial goals

Now that you have a better idea of where you are, it’s time to think about where you want to go.

This is the fun part because you can think about your dreams for your future.

But it’s also where people can get stuck because they set goals that are too vague or unrealistic.

Instead of saying, “I want to save a lot of money,” try:

• “I want to save $1,000 for emergencies by June.”
• “I want to pay off my $5,000 credit card by the end of the year.”
• “I want to put $200 each month in my retirement account.”

Your goals should be specific, measurable, and actually fit your life.

And, it’s okay to start small.

You don’t have to pay off all your debt or save six months of expenses right away. You can pick one or two goals that feel important to you and break them into monthly steps.

For example, if your goal is to save $1,000 in 6 months, that’s about $167 each month or $42 each week. Seeing the breakdown makes it feel much more doable.

You can even add visual reminders, like a tracker on your fridge or a savings jar, to keep you motivated.I even have a 52 Week Money Challenge that you can download. The 52 Week Money Challenge is a great way to save $1,040 a year without noticing! All you have to do is save $20 each week for a year, and then you’ll easily have $1,040.

3. Build a budget that works for your life

A budget isn’t about restrictions. It’s about telling your money where to go.

Think of your budget as your financial roadmap. It shows you how much is coming in, where it’s going, and how to make space for the things that you care about.

You can start by listing your fixed expenses (like rent or mortgage, utilities, car payment, insurance), then your variable ones (groceries, gas, entertainment). Then, look at what’s realistic and see where you can cut back if needed.

Also, most people forget to plan for non-monthly expenses, so don’t forget about things like:

• Holidays and birthdays
• Annual insurance premiums
• Car repairs or registration
• Travel or vacations

You can have a line item in your budget for each of these and save money toward them each month. For example, if you want to save $600 for gifts each December, then you can put $50 toward them each month in your budget.

You can use a printable, a Google Sheet, budgeting apps, or just a piece of paper and a pencil/pen to track everything.

There are a few different budgeting methods to try:

• Zero-based budgeting: Every dollar has a job, so income minus expenses equals zero.
• 50/30/20 rule: 50% of your income goes to needs, 30% to wants, and 20% to savings and debt.
• Pay yourself first: Save or invest a set amount first, then use the rest for bills and spending.

There are, of course, other budgeting methods as well.

Personally, I think there are positives to most methods; it just depends on what will best work for you and your household.

Recommended reading: The Complete Budgeting Guide: How To Create A Budget That Works.

4. Automate your finances

Want to make your financial plan easier to stick to? Automate everything you can.

Automating your savings, bills, and even investments takes the pressure off of having to remember each month, and it helps you build better habits.

Here are a few things you can automate:

• Transfers to your emergency fund or savings account
• Minimum (or full) debt payments
• Monthly investing
• Utility or cell phone bill payments

Even if you’re only able to start with $25 per week into savings, that adds up to $1,300 per year.

Plus, when you automate savings first, it becomes harder to accidentally spend money you meant to save.

And yes, I still look at my bills every single month. Automating my finances doesn’t mean I stop paying attention – it just means my bills get paid on time without me having to think about them. I still review everything so I know exactly where my money is going and to catch anything unusual. This simply saves some time so that I don’t forget a payment or forget to save money that month.

Recommended reading: How To Simplify Your Financial Life – 12 Best Tips

5. Build your emergency fund

Having an emergency fund gives you peace of mind and helps you avoid going into debt when life throws you a curveball.

If you’re starting from scratch, don’t panic. Your first goal can simply be $500 or $1,000. That amount can help you pay for an unexpected car repair or vet bill.

Once you reach that, aim for 3–6 months of expenses. So, if you typically spend $5,000 each month, then you will want between $15,000 and $30,000 saved. I know that this sounds like a lot, but you don’t need to save it all at once.

Here are a few ways to build your emergency fund faster:

• Set up automatic transfers right after payday
• Sell unused items around the house
• Use part of your tax refund or side hustle money

I recommend keeping your emergency fund in a high-yield savings account, separate from your checking account, so it’s not as tempting to spend. I personally use a high-yield savings account as they have a very high rate. You can find my favorite high-yield savings account here at this bank. You can get up to 3.75% at the time of this writing.

Recommended reading: How To Start An Emergency Fund

6. Make a debt payoff plan

Having debt can feel overwhelming, but making a plan helps you take back control of your life.

You can start your debt payoff plan by writing down all your debts, including balances, minimum payments, and interest rates.

Then choose a debt payoff strategy:

• Snowball method: Pay off your smallest debt first for a quick win.
• Avalanche method: Pay off the highest interest rate debt first to save the most money.

There’s no right or wrong method. I say go with the one that motivates you the most. Some people like the snowball method because you can watch your debts go away one by one, and others like to save money on interest, so they like to pay their debts off that have the highest interest rates first.

Also, look into refinancing options. If you have high-interest loans, you might be able to lower your rates with a company like iLending (on average, iLending customers save around $145 per month on their car loans – that’s $1,740 each year!). That can save you money and simplify your payments.

Recommended reading: How To Pay Off Debt And Break Free Of The Debt Cycle

7. Evaluate your insurance, subscriptions, and bills

Your financial plan isn’t just about saving and budgeting. It’s also about trimming what you don’t need.

It’s so easy to not think twice about an expense that maybe has gone up $10 a month each year. But, over time, that $10 can turn into $120 a year, year after year (plus all of the other future monthly increases).

I recently let an internet bill get out of control. I kept putting it off, but I knew I had to call them. It started out at around $45 per month. I then realized it was $93 per month, after just a few years (they increased my bill by $10 a month each year). As you can see, that is a huge difference! I called, and they were able to save me around $35 per month on my bill. That is $420 saved each year!

So, once a year, take a close look at your recurring expenses:

• Are you using all your streaming services?
• Could you get a better deal on your car or home insurance?
• Has your internet bill gone up?
• Do you have subscriptions renewing that you forgot about?

Many companies will give you discounts if you ask – especially if you bundle policies or sign up for autopay.

Recommended reading: 50+ Of The Best Money Saving Ideas

8. Save and invest

Even if you’re just getting started, this is an important piece of your plan. Saving and investing regularly – even small amounts – helps you build long-term wealth.

Here’s what to think about:

• Are you contributing to a retirement account like a 401(k) or IRA?
• Can you increase your savings rate by just 1% this year?
• Do you have automatic contributions set up?
• Does your company do a 401(k) match?

You don’t have to be a finance expert to get started.

Open an account, set up small automatic contributions, and let it grow.

Recommended reading: How To Start Investing For Beginners With Little Money

P.S. If you’re aiming for early retirement, a tool like Boldin can help you figure out if your financial plan is realistic. It lets you plug in your numbers, run different scenarios, and see how long your money might last. I’ve used it myself and found it super helpful for making smart, confident choices about my future.

Also, some great books to learn more about personal finance and retirement include:

• The Simple Path To Wealth
• I Will Teach You To Be Rich
• Work Optional: Retire Early the Non-Penny-Pinching Way
• Quit Like A Millionaire

9. Start (or grow) a side hustle

One of the best ways to reach your financial goals faster is to increase your income.

Even earning an extra $100 to $300 each month can help you:

• Build your emergency fund
• Pay off debt faster
• Save for something fun

Thanks to side hustles, I was able to pay off my $40,000 in student loans in just 7 months (you can learn about this at How To Pay Off Student Loans Faster by Starting a Side Hustle).

Now, you don’t have to start something that takes up so much time, though. You can do something that only uses a couple of your hours each week, or you can start a full-time business on the side.

It’s up to you and what your goals are.

Here are some ways to make more money on the side:

• Play games on Freecash (I once earned $302 in just one week playing games on this app)
• Sell unused items online
• Sell freelance services like writing, design, or virtual assistance
• Start a blog, YouTube channel, or Etsy shop

The best part is that many side hustles are flexible and can fit around your current job or family life.

Recommended reading:

• 17 Low Effort Side Hustles That Can Make You Extra Money
• 75 Ways To Make Extra Money
• 9 Easiest Work at Home Jobs That Require Zero Experience

10. Track your progress and adjust as needed

The best financial plans are the ones you actually check in on.

Each month or quarter, sit down and ask yourself questions like:

• How am I doing with my goals? Do I still want to work on these goals, or should I change them?
• Did I overspend in any categories?
• What’s working well?
• What needs adjusting?

I think doing this is important because it helps you stay motivated, find problems early, and stay motivated. You can use a journal, a spreadsheet, or just review your Empower dashboard to stay on top of everything.

Frequently Asked Questions

Here are answers to common questions about how to create a realistic financial plan.

When should I start planning my finances?

Right now! It’s never too early or too late to make a plan. Whether it’s January, July, or whenever, a plan can help you feel more in control and reach your goals in life.

What if I feel overwhelmed and don’t know where to start with a financial plan?

You can start with one small thing – like tracking your spending or setting a mini savings goal. You can focus on one step at a time (don’t try to do everything in one day because that can be stressful).

How much should I save in an emergency fund?

You can start with $500 or $1,000, and eventually aim for 3–6 months of expenses. But remember, saving anything is better than nothing.

How often should I check in on my financial plan?

Monthly or quarterly is great, and you can do a mini review to see how you’re doing with your goals and spending.

What if I don’t earn enough to save or pay off debt?

Look at both sides: Reduce expenses where you can and find ways to earn more. Even a small extra income from side hustles can help.

Do I need a financial advisor to make a plan?

Not at all! You can absolutely create a plan yourself. But if you need personalized help, a financial planner can be a great support. But, you don’t need one if you don’t want to. I don’t have a financial planner, and I know plenty of other people who manage their finances on their own as well. If you do go the route of getting a financial planner, please make sure that you do your research and that you’re not just talking to a salesperson who is trying to sell you a bunch of financial products.

How To Create a Realistic Financial Plan – Summary

I hope you enjoyed my article on how to create a realistic financial plan that you actually stick to.

I like having a financial plan because I find it motivating to think about what I want my future to look like. It also gives me small, clear tasks to work on and think about as I go about my everyday life (for example, deciding where extra money should go or what goal I want to focus on next).

You don’t need a perfect plan. You just need one that feels realistic and doable for you.

The best financial plan is the one you can stick to – the one that lets you build better habits, feel less stressed, and make real progress over time.

What financial goal are you working on right now?

Recommended reading:

• How I Retired At Age 30 with $500,000
• 21 Best Early Retirement Tips To Help You Retire Early
• 12 Passive Income Ideas That Will Let You Enjoy Life More

The post How To Create a Realistic Financial Plan (That You’ll Actually Stick To) appeared first on Making Sense Of Cents.