Beginner’s Guide: How To Create A Financial Plan

By Eric Rucker on The Capital

Creating a Financial Plan

Chances are you could use some more money, but where to get it from. You could ask your boss for a raise…or sell something old, that is collecting dust and you never use. I know, maybe you could collect trading cards and sell those for a little extra cash each month.

I don’t know about you but none of those sound very appealing. I mean asking your boss for a raise might work but who knows if they have the means to pay you more. So if you cannot bring in extra money, how can you make sure you’re getting the most out of the money you are bringing in? Creating a financial plan.


The first and probably most important thing to examine when you are creating a financial plan is how much money you are bringing in. Have a full-time or part-time job? How much are you bringing in on payday? Do you have a side hustle? How much are you consistently bringing home every month? Does your spouse or significant other work? How much do they bring home each month?

Next, how often do you get paid? Once a month? Twice a month? Every Two weeks? Weekly? The frequency of when you get paid will help you know how to divide your money among the following categories each pay period.

  • Expenses
  • Savings
  • Spending Money


Now we’ve come to the part that really no one likes, expenses. This means bills, like utilities, car payment, mortgage, phone bills, and car insurance. This includes groceries and gas as well. Knowing how much you spend each month on these necessities will help you determine if you are spending too much in these areas and where you may need to cut back.

Ow, we can’t forget about debt either, these are credit cards, student loans, and bills you are behind on. If you set aside money for these every month you will be able to dig yourself out of the hole bit by bit.

In this category, you should also keep track of subscriptions like Netflix, Amazon Prime, and Spotify. Individually they may not seem like great expenses but when put together they begin to add up.

Some expenses vary from month to month, like eating out, going to the movies, and other solo and family activities. It is good practice to have a cap on spending in these areas because it is very easy to go overboard here.


When it comes to saving, the first thing you want to focus on is establishing an emergency fund. This will be used if you need a new set of tires for your car, need to pay the deductible on an insurance claim, or lose your job unexpectedly. By planning for it you will be able to build this fund and limit the financial damage an unplanned expense can have.

If you are someone who has kids, you can save for their college fund, their first car, or maybe you save to buy yourself a new car or to go on a vacation you’ve been planning. Planning ahead will help make long term savings goals attainable because you are working towards them each paycheck by setting money aside.

In addition to an emergency fund, you should also plan to save for retirement. If you are young, start small and scale up as you grow in your career. If you are an established professional and can afford to put in a bit more money you will be happy when retirement comes and your discipline pays off.

Spending Money

Spending money is any money left over after your expenses and savings are taken care of. This is the money that you can blow with a guilt-free conscience knowing that you have your money planned out.

This can be used for new technology, new clothes, new shoes, whatever you’d like. There is nothing wrong with an occasional splurge as it will help you stay energized and motivated.

If you’re feeling a bit more responsible? Then you can save this money or invest this money into a need that you have been putting off or into the stock market and have this money work for you. The best part, this is the money you can do whatever you want with.

Full Picture

The finished product should include your payday and any expenses that would need to be taken care of that pay period. I encourage you to list out each individual expense instead of lumping them all together and subtracting from your pay.

By doing this you will be able to keep each expense at the forefront of your mind and be able to see if each expense is really needed. If you plan on making a purchase that is not within your normal expenses, go ahead and list that as well so that you will have an accurate picture of finances.


June 1st

  • $800 Rent
  • $400 Savings
  • $200 Groceries
  • $100 Credit Cards
  • $100 Solo/Family Activities
  • $50 Eating Out
  • $35 Gas
  • $30 Internet
  • $30 Subscriptions
  • $200 Remaining

June 15th

  • $400 Retirement
  • $350 Car Payment
  • $200 Utilities
  • $200 Groceries
  • $150 Car Insurance
  • $100 Solo/Family Activities
  • $80 Phone Bill
  • $50 Eating Out
  • $35 Gas
  • $380 Remaining

Disclaimer, this is just a made-up example, do not put too much stock into the numbers. This example is to give you an idea of what a completed financial plan for a month may look like. I encourage you to take the principles I have talked about and make them your own. Tailor them to your own life and put your own spin on budgeting.

You can also jazz it up by putting your data into graphs and charts. This will help you visualize your plan and make financial planning a more entertaining process.

Wrapping It Up

The purpose of a financial plan is to ensure that money earned is money well spent. It is to make sure that money is not wasted or overspent in one area. Financial planning will help you get the most out of your money and set you up for financial success today and in the future.

How will creating a budget help you? Where do you think you spend most of your money? Did I miss a category you will include in your plan?

Beginner’s Guide: How To Create A Financial Plan was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

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