6 questions to help you create a financial plan (2024)

Trying to tackle your first financial plan? Figuring out your finances is tricky, even downright intimidating.

But, creating a good financial plan can help lay the groundwork for strong savings and a bright future. And it all starts with a few simple questions.

What is financial planning?

Financial planning is a catch-all term for using your money to achieve short- and long-term financial goals. Creating a financial plan is important as it can help reduce the stress associated with daily decisions around cash while also establishing good habits for the future.

Financial planning is important because it helps you decide how to use your cash today and tomorrow. The financial planning process could involve professionals, online tools or just a DIY approach.

What we learned from reviews

Nothing compares to learning from people with first-hand experience and it’s even more important when putting your trust in financial services. That’s where reviews can come in.

As part of our recent Online Review Index research we looked at reviews left on Trustpilot in the US between April and June 2023 to learn more about what matters to people when financial planning. Here’s what we found:

Positive reviews in our money and insurance category have increased in comparison to last year.

There are also more positive reviews around customer service, with more US consumers mentioning an improvement in this area in the last 12 months.

Contact with staff and payment processes were also commended.

Credit score and money transfer services were singled out for praise.

As you build your financial plan and identify your own priorities, don’t forget to search for top rated companies in our money and insurance category. and let reviews help you make more informed decisions.

6 questions to ask when you begin financial planning

What’s the first step in financial planning? Start by asking yourself a few simple questions about your money, spending, habits and what you want your financial future to look like.

What goals do I have?

If you don’t know where you want to go, you’ll have difficulty figuring out how to get there. Start by asking: What do I want my life to look like in 5, 10 or 15 years?

The answer could include everything from “living debt-free” to “purchasing a home” or “paying for my kid’s college education.” There’s no right answer to the question, but the responses set you up with goals to work toward and a clear path to put your money to work.

How can I track my finances?

It’ll be hard to put your finances to your financial goals if you don’t track spending. To get an idea of your baseline finances, it can help to check out your credit report, and it may highlight areas of growth or improvement in your financial journey.

To understand how much money you can contribute toward your monthly financial goals, you’ll need to understand what money’s coming in and what’s going out. Consider using a personal finance app to automatically track your spending or creating an old-school spreadsheet. Read reviews of budgeting apps to see which might be right for you.

Once you know how much money you have to put toward goals, you can establish a financial planning timeline that makes achieving each goal realistic. You may also notice areas where you can improve or reduce spending.

Am I missing out on “free money?”

You may be able to reach retirement goals faster with the benefit of “free money,” aka employer matches or contributions to retirement accounts. If you’re unsure of benefits at work, ask the HR department about 401(k) matching policies. Your employer may “match” your monthly retirement contributions up to a certain percentage.

Similarly, if you’re saving for a shorter-term goal, consider taking advantage of banks with competitive savings account annual percentage rates (APRs), like a neobank. A higher APR could bring in more cash toward your goal, with relatively little work on your end. Read reviews to find the high-interest savings account that is right for you.

Do I have an emergency fund?

As exciting as saving for a down payment on a home is, you risk losing it all if you don’t also have an emergency fund set up.

Start with a small fund, even just a few hundred dollars, to avoid racking up credit card debt in case of a car repair or other unexpected expense. Once you reach the smaller goal, consider setting aside a fund large enough to cover a few months’ living expenses, which you can figure out from your finance tracking.

Planning for the worst-case scenario can help avoid dipping into other financial goals like retirement or down payment savings.

How am I paying down high-interest debt?

If you're carrying high-interest debt, you could be accruing more interest each month than you can save, causing the debt to grow even larger. If you have high-interest debt, there are a few different options you could consider depending on your circumstances and preference, like putting more money toward monthly payments or taking out a debt consolidation loan with a lower interest rate.

Read reviews of debt relief companies before choosing one to work with.

Am I investing in my future?

Part of the intimidation of financial planning may come from understanding how best to allocate investments. While most of us aren’t experts, some tools can make the process simpler.

If you’re contributing more toward investing, you may consider working with a financial advisor or robo-advisor. Both methods have their benefits and drawbacks, and either may help alleviate the stress of investing, freeing you up to focus on other goals.

Unsure where to start? Look no further than our beginner's guide to investing.

Bottom Line

Financial planning may seem intimidating initially, but ultimately, the financial planning process just comes down to asking a few questions. From there, you may uncover goals and directions to secure the right financial future for you.

Trustpilot is a review platform that is open to all. The companies and profile pages referenced in this article are provided for informational purposes only and are not recommended, endorsed by, or representative of the views of Trustpilot. The Trustpilot companies linked in this post are expected to abide byTrustpilot’s Guidelines, but have not been reviewed for compliance.

I am a financial planning enthusiast with a deep understanding of the intricacies involved in managing one's finances. Over the years, I have gained first-hand expertise in financial planning through extensive research, practical application, and staying abreast of industry developments. My insights are grounded in a comprehensive understanding of various financial concepts and a commitment to providing valuable information to individuals seeking to navigate the complexities of financial planning.

Now, let's delve into the key concepts presented in the article:

  1. Financial Planning Definition: Financial planning is the comprehensive process of using your money strategically to achieve both short-term and long-term financial goals. It involves making informed decisions about your finances to reduce stress associated with daily cash decisions and to establish good financial habits for the future.

  2. Importance of Financial Planning: The article highlights the importance of financial planning in helping individuals decide how to utilize their cash today and tomorrow. A well-crafted financial plan not only addresses current financial needs but also lays the groundwork for a secure and prosperous future.

  3. Learning from Reviews: The article emphasizes the value of learning from the first-hand experiences of others, especially in the realm of financial services. It mentions positive trends in reviews related to money and insurance categories, with an increase in positive feedback regarding customer service, contact with staff, payment processes, and praise for credit score and money transfer services.

  4. Questions to Ask When Beginning Financial Planning: The article provides six essential questions to guide individuals in creating their financial plan:

    • What goals do I have?
    • How can I track my finances?
    • Am I missing out on "free money"?
    • Do I have an emergency fund?
    • How am I paying down high-interest debt?
    • Am I investing in my future?
  5. Tracking Finances: The importance of tracking spending is emphasized to understand baseline finances. Suggestions include checking credit reports, using personal finance apps, or creating spreadsheets. Reviews of budgeting apps are recommended to identify the right tool for individual needs.

  6. Leveraging "Free Money" and Emergency Fund: The article advises individuals to explore opportunities for employer matches or contributions to retirement accounts for accelerated retirement goals. Additionally, it stresses the importance of having an emergency fund to avoid compromising other financial goals in the face of unexpected expenses.

  7. Managing High-Interest Debt: The article acknowledges the impact of high-interest debt on financial goals and recommends exploring options such as increased monthly payments or debt consolidation loans with lower interest rates. It suggests reading reviews of debt relief companies before making a decision.

  8. Investing in the Future: The article recognizes the challenge of investing and suggests considering financial advisors or robo-advisors. It emphasizes the importance of allocating investments wisely and directs readers to a beginner's guide to investing for further assistance.

In conclusion, the article underscores that while financial planning may initially appear intimidating, it ultimately boils down to asking crucial questions and uncovering goals that pave the way for a secure financial future.

6 questions to help you create a financial plan (2024)


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