How to Make a Financial Plan



Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Human wants are insatiable and our means to reach them are quite limited. However, with proper planning and financial management, we can achieve the majority of our goals.

Everyone seeks to be financially independent and build significant wealth. And as an Army General draws up tactics to win a war, creating a financial plan can be an effective blueprint for your journey towards financial independence.  

Most people are unhappy or at best unsatisfied with their current financial situation. If you are wondering how you can come up with a plan to turn your fortunes around, you are just in the right place.

In this article, I will take you through everything you need to know about a financial plan as well as how you can create one for yourself. Keep reading, then get ready to take some action to own your financial future.

What is a Financial Plan?

A financial plan is a tool to create a roadmap for the various goals that you aim to achieve in life in tune with your income potentials. Financial planning can be done on your own or in consultation with a professional.

A financial plan is a comprehensive picture of your current income, your financial goals, life milestones as well as strategies drawn up to help achieve those goals within the limits of your potential income. A good financial plan should include details about your earnings, savings, debts, cash flow, investments, Insurance and other crucial elements of your financial life.

Financial planning is typically an on-going process that helps you to attain financial security. It helps you apply your short-term earnings and assets towards meeting your future goals. The main aim of a financial plan is to cut waste and expand your earnings and help you stay in control of your spending. 

Contrary to major misconceptions, financial planning isn’t just for wealthy people. Everyone needs a road map for their financial future within their tax bracket.

How to Make a Financial Plan in 10 Easy Steps 

1. Start by Setting and Stating your Financial goals

A good financial plan has to be custom made. Guided by your own financial goals. When setting goals it is important to find a balance between being ambitious and realistic.

Your financial goals should be futuristic and inspirational — where do you wish to be in 5 years? Do you wish to own a new house? Have a dream wedding? Relocate to a different country? Or pay for your education? Are kids in the picture? How do you imagine your retirement? Etc.

You start with goals that will inspire you to complete the next steps and do all it takes to achieve them. Establish your SMART goals, place a timeframe and specific amounts of money you need to reach to attain them. This will increase your chances of success.

2) Perform an Audit of Your Current Financial Status

After establishing your goals, the next step is to determine the amount of money you currently have, your potential income in the near future, what you owe to other people and the value of assets that you own. This will provide a picture of your current financial standing i.e. net-worth. It will also help you to objectively evaluate how realistic or challenging the goals that you have set are.

Ideally, the results of your audit could lead you to make a few adjustments to the goals you have in one way or the other.

3) Start an Emergency Fund & Insurance

The bedrock of any plan is the plan B. When you make a financial plan, accidents and unexpected events may occur that may lead you to fall back into financial difficulty quickly. Emergency funds and Insurance are safety nets that can help you avoid setbacks and stay on track to achieve your financial goals.

An emergency fund can be a savings account that you set aside to offset any unforeseen contingencies, such as terminal illnesses, job loss etc. Experts recommend that you have three months of your living expenses in your emergency fund.

Taking relevant insurance covers can also play a vital role in making sure your financial plans remain right on track in the event of unfortunate incidents like burglary, fire outbreak, among others.

Emergency planning is essential to your financial future as it prevents unfortunate incidents from becoming full-blown disasters.

4) Tackle Debts

Another crucial step in any financial plan is to try to get out of the vicious cycle of debts as soon as possible. High-interest debts can have a crippling effect on your financial and mental well-being.

Hence, a great financial plan must include a fool-proof plan to manage your debts carefully. While it may be foolhardy to attempt to pay-off all debts instantly, it is important to create a debt management plan to cover your minimum payments within your current income profile.

In debt management, your main goal should be to prevent the interests from piling up. If you have been struggling to meet up with your monthly repayments, you may approach your bank for a restructure to create a new repayment plan that suits your current earnings. Other techniques to manage your debts are negotiating for lower interest rates or stretching out your payments for longer periods.

If you have multiple debts, ensure you tackle the ones with the highest interest rates first. You may need to consult a finance consultant to create an effective debt management plan.

5) Plan for Taxes

Everyone hates paying taxes, but trust me, you are going to hate prison even more. No matter the level of financial quagmire that you find yourself in, the taxman is not going to let off. So, when you make your fantasy financial plans on your journey to financial paradise, ensure that you factor in your taxes – in full.

When you make financial projections, it is important to plan your tax remittance in such a way that it does not affect your cash flow in a major way. When you make your investment returns projections too, always remember to factor in the applicable taxes on each stream of income to get a true picture of your disposable income.

However, the good news is that with a good financial planner and typically a tax accountant, you can find legitimate ways to reduce your tax burden or even earn some tax refunds.

6) Create a Spending Plan

The crux of every financial plan is to plan your periodic expenses in such a way that if stays below your earnings. Basically, if you spend more than you earn, you are heading for serious financial problems in the near future.

Therefore, it is necessary to create a list of your recurrent expenses and look for areas to cut down on your spending. A spending plan should have an earning plan that accompanies it. You should look to expand your earnings in the short and medium-term. You can achieve this by seeking out a new job, negotiating a pay rise on your current job, pick up extra hours, starting a side hustle, etc.

7) Create an Investment Plan

Real financial security comes from wealth building. Even while you toil on your 9 to 5, you can still access lucrative channels to earn passive income. There are several ways that you can invest your savings and built up capital and assets to earn income while you focus on other daily activities.

Some of the viable ways to invest in Canada include Stocks, Cryptocurrency, Asset-leasing, among others. You may contact a broker or investment professional to get expert advice on investment opportunities available within your province.

8) Create an Estate Plan

Estate planning does not sound exciting. But death is inevitable. And despite what the government says about life expectancy rates, nobody really knows when it’s going to be.

Estate planning is essential for everyone. It allows you to determine what happens to your assets when you die. Proper estate planning involves:

  • Listing out all your assets.
  • Drawing up a will.
  • Making it accessible to the people who should have access to it.

If, like everyone else, you are unsure how to go about it, an Estate lawyer can help you set things up.

9) Stay on Course

No matter how solid, a financial plan is only as good as the discipline of the executer. The success of your plan and the achievement of your goals all rests in your hands. Financial consultants, brokers, accountants, and lawyers can only provide guidance. The ball remains right in your court.  

The journey to financial security won’t be a comfortable ride. Even in the Sahara, there are rainy days. Be disciplined, take things one day at a time and learn from your mistakes.

10) Review Frequently

Once you have outlined your financial plan and gotten it up and running, it’s crucial that you review your plans frequently and make the necessary adjustments. Life is complicated and multifaceted. Circumstances can quickly change, sometimes for the better other times worse.

If you make regular checks, you may predict negative turns and prepare for them way before they happen. Likewise, you may spot new opportunities to improve your earnings or enhance your plan.

DIY Financial Planning Tools

Suppose you are looking for ways to deploy a financial plan on your own. Tools like the 50 30 20 rule can help you. It enables you to allocate your income effectively towards your needs. You can find more details about it here.

Also, several online services like Robo-advisors and computer applications have made financial planning more affordable and accessible than ever.

Budgeting tools
Expense Tracking tools
  • Simplifi – Best for Cash flow forecasting
  • Albert – Best for Savings
Tax management tools
  • Turbo Tax – Best for businesses & Higher Income Earners
  • Wealthsimple Tax – Best user Interface for beginners
  • UFile – Best for Low-Income Earners

However, it is essential to note that these are not substitutes for professional financial advisory.

Where to get Financial Planning Advice in Canada

Everywhere you turn on the internet today, someone is offering you a piece of advice. While it might be wise to take some of them on board, you should understand that only a qualified financial advisor can offer you professional advice.

To get information about finding a qualified financial advisor, you should contact the Financial Consumer Agency of Canada. The Canadian government also provides explicit information about where you can find a financial advisor. Click here to learn more.


There have been instances of people who won the lottery worth hundreds of millions of dollars, lost it all, and went back to being dirt poor. Therefore regardless of how much you currently earn, it is crucial that you have a financial plan.

Everyone must get familiar with some fundamental concepts in finances. It doesn’t matter if you are a surgeon, a supermodel, or a Soundcloud rapper.

On a final note, while it may be necessary to seek advice from finance professionals, you should understand that nobody really cares about your financial future more than you.

You Might Like

Post Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Essential reads, delivered weekly

Join the Financial Literacy Train. Get the latest financial information delivered right to your inbox.


Deals and Offers

We’ve rounded up the Best life in Canada, with the best promotions, and the best sign-up bonuses, to help you maximize your benefits.

EQ Bank US Dollar Account

Earn more on your US dollars

World Elite Mastercard

A card for travelling with exclusive perks

Platinum Mastercard

Earn 1 point for every dollar spent


Post Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Canada Buzz Editorial

Product News and Recommendations Senior Editor

Latest Post

Advertiser Disclosure

Canada Buzz is an advertising-supported blog. Some products and services that appear on this site are from companies from which Canadabuzz receives compensation. We may alter brand placements on our website to amplify our partners and their offers. Any time you click to our partner websites or register for a product or services through an affiliate link on our website, we may earn a commission at ZERO cost to you.

Canada Buzz is a purely informational blog. Opinions expressed on this blog are NOT endorsed by the reviewed brands. The information provided on this website does not constitute financial or professional advice. However, our team strives to bring you quality, unbiased information.



Avid researcher, freelance writer, and personal finance enthusiast passionate about financial education and literacy.

Latest Post

Kareena Maya

Personal Finance and Travel Rewards Expert Contributor



Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.