When it comes to building the life you want, having a plan for your money is one of the most powerful tools you can use. Whether you are hoping to buy a home, change career, start a family or simply feel more confident about your future, financial planning for beginners offers a clear route to achieving your goals.
Rather than being a task reserved for the wealthy, financial planning is for everyone. And it doesn’t have to be complicated. It is simply about understanding where you are now, deciding where you would like to be, and creating a roadmap to help you get there. Even if you are starting from scratch, taking those first steps can make a meaningful difference.
In this guide, we will take you through the fundamentals of personal financial planning, one step at a time. From assessing your current financial situation to setting achievable goals, starting a financial plan, building a budget, saving with purpose and starting to invest, you will find practical advice to help you gain control and move forward with clarity.
Ready to start building your financial plan? Let us start at the very beginning: where you are right now.
Step 1: Understand where you stand financially
Before you can set goals or make changes, it is important to gain a clear picture of your current financial situation. This first step in starting a financial plan involves understanding your income, outgoings, savings and debts. Once everything is laid out, you can start to take control.
Reviewing the following can be a good place to start:
Income: List all your regular sources of income. This could include salary, self-employed earnings, rental income, or any benefits you receive.
Outgoings: Record your essential expenses such as rent or mortgage, utility bills, groceries, travel and childcare. Include your non-essential spending too – such as subscriptions, leisure and eating out.
Savings and assets: Include cash savings, pensions, investments and any valuable possessions or property you own.
Debts and liabilities: Note all outstanding loans, credit card balances, overdrafts or other money you owe (recording the APR relevant to these is also important).
Creating a simple spreadsheet or using a budgeting app can help you track these figures easily. The aim is not to judge where your money goes, but to understand it so you can begin to make informed decisions.
This step lays the foundation for everything that follows – once you know where you stand, you can begin to define where you want to go, and how to build a workable game plan.
Step 2: Define your personal financial goals
Once you understand your current financial position, the next step is to think about what you would like to achieve. Try doing this in a personal sense rather than in a financial sense. In basic financial planning, goals act as a guiding light, helping you stay focused and motivated as you manage your money. It is also a very good way to keep you focused on the big picture, and help ease concerns over bumps in the road.
So for example, rather than focusing on saving “£x”, you may want to work towards the goal of moving from renting to buying your own property, or being in a position to start your own business, or retire comfortably / early.
It can be helpful to use the “SMART” method when setting your goals. This means aiming for goals that are:
- Specific – you know exactly what you want to achieve
- Measurable – you can track your progress
- Achievable – the goal is realistic based on your income and expenses
- Relevant – it fits your personal life priorities
- Time-bound – there is a target date to aim for
You do not need to have all the answers straight away: a game plan can take 2 to 3 years to establish. Financial goals often evolve as your life changes but what matters is starting with a few key objectives that are meaningful to you.
If you are unsure where to begin, or would like some help prioritising your goals, a professional financial planner could help you explore your options, ask you some fundamental questions to help you understand what motivates you, and ensure your plan reflects what matters most in your life – both now, and in the future.
Step 3: Create a budget you can stick to
A budget is one of the most important tools in financial planning for beginners. It can help you truly appreciate where your money goes, and give you more control over how you spend and save.
Creating a budget does not need to be complicated. The aim is simply to compare your income with your expenses and make sure you are living within your means. You can then look for ways to save more, reduce debt, or put money towards your goals.
The first step of this process should have helped you understand where you are financially, giving you a good idea of your income and expenditure. The next step is to review the balance between the two.
If you find that you are spending more than you earn, then you may wish to look at how you could improve your position, perhaps by cutting unnecessary (discretionary) expenditure, or negotiating better rates on things like utilities or other outgoings.
If on the other hand you find that you have surplus funds left over on a regular basis, then it can be a good idea to speak with a financial planner to work out how to make these funds work better for you, towards your short and long term goals. For example, depending on various factors, you may wish to consider a savings and investment strategy.
💡 Budgeting tips
- Review your spending regularly – patterns can change
- Use apps or spreadsheets to keep track
- Be realistic – allow some room for enjoyment
Budgeting is not about restriction. It is about having more clarity and confidence when it comes to your finances.
If you are unsure how to shape a budget around your personal goals, or need support managing your spending habits, a financial planner could help you build a realistic plan that fits your lifestyle and sets you up for long-term success.
Step 4: Build an emergency fund
Even the most carefully made financial plans can be disrupted by unexpected expenses. That is why having an emergency fund is considered a key part of basic financial planning, allowing you to handle unexpected expenses without having to dip into your everyday income.
You do not necessarily need to build your emergency fund all at once. You could start small, aiming for one month’s worth of essential outgoings, then gradually build up to three to six months’ worth. It is very easy to put in place an action plan to make this as painless as possible.
Keeping your emergency fund in an easy-access savings account can make it easy to reach when you need it, while keeping it separate from your everyday account and reducing the temptation to dip into it.
Step 5: Plan for future goals with savings and investments
Once your emergency fund is in place, you may wish to look at how to grow your money over time. Saving and investing are two ways to do this, and each plays a different role in a well-rounded financial plan.
Saving can often be seen as the better option for shorter-term goals – for example, a holiday or home deposit. It can be useful to set up separate savings pots for different purposes, ideally in accounts that offer competitive interest rates and suit your level of access needs.
Investing, on the other hand, may be more appropriate for longer-term goals – such as early retirement planning or even funding a child’s education. While investments can carry more risk than savings, they can, if managed correctly, offer the potential for greater returns over time. Options might include stocks and shares, ISAs or pensions but the right mix depends on your personal situation and risk tolerance.
💡 Top tip
If you are considering investing, it is prudent to seek specialist professional advice to ensure your choices reflect your personal goals, values and attitude to risk.
Step 6: Review and adjust your plan regularly
Creating a financial plan is not a one-time task. As your life changes, your financial plan will need to adapt with you. A new job, buying a property, having children, or even changes to interest rates or inflation are all factors that can potentially affect your financial situation and goals.
It can therefore be helpful to review your financial plan at least once a year, or whenever something significant changes. This might involve:
- Checking whether you are still on track to meet your goals
- Adjusting your budget to reflect changes in income or spending
- Reassessing the levels of your savings and investments
- Reviewing insurance or protection policies you have in place, to ensure they are still providing an appropriate safety net for you and your loved ones.
💡 Bonus tips
Some people choose to set reminders or make their financial review part of their annual routine, think of it as a health check for your money.
Working with a financial planner can give you peace of mind that your plan is still aligned with your life goals. They can help you make sense of changes in the financial landscape, and offer suggestions tailored to your personal circumstances.
Starting a financial plan? Finli is here to help you focus on what REALLY matters.
Starting a financial plan is about more than just managing money. It is about building a strategy that supports the life you want to lead, now and in the future.
By taking simple, practical steps – from understanding your finances and setting meaningful goals, to budgeting, saving, and investing wisely – you can begin to take control of your financial future. Regular reviews will help ensure your plan stays aligned with your changing circumstances and priorities.
At Finli, we believe that your financial plan should reflect your life and your personal aspirations. We place your finances within the broader context of your story, providing tailored advice and guidance that is relevant to where you are now, and where you want to be.
If you are ready to start your financial planning journey, why not work with one of our financial planners? Contact us today for expert support tailored to your life story, and we will help you create a game plan that works for you – now, and as your life evolves.