Learn and Plan | Beginner’s guide to financial planning basics
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Beginner’s guide to financial planning basics

Oct 9, 2023, 2:37:00 PM | Reading Time: 4 minutes

October is Financial Planning Month and is a perfect opportunity to reflect on your financial goals and what you have yet to accomplish before the busy holiday season. You may have already created a financial plan or decided now is an excellent time to start. Either way, having this type of road map can help you manage your money and make more confident financial decisions. While creating a financial plan can look different for each person, several basics can help set you up for success.

Beginner's guide to financial planning basics


What is a financial plan?

The idea of financial planning may seem intimidating, but it’s much simpler than you might think. Since each plan is unique to the individual, you can make it as detailed or as straightforward as you choose. Typically, a financial plan is a written or digital document that outlines short- and long-term financial goals and the timeline you’d like to accomplish each. You can then regularly review your financial plan and see if you’re on track, decide if you need to make adjustments, and determine if your money habits support your goals. A financial plan provides direction and can help guide your money decisions. Remember, this document is fluid and can change as you age and your needs or circumstances evolve. When it comes to financial planning, the earlier you start, the sooner you can adopt healthy habits, build your savings, and understand how to manage your money more effectively. This can help minimize financial stress and create a more sound foundation for the future.

How to create a financial plan: simplify the financial planning process with these steps

As you dig into the financial planning process, evaluating where you are and where you plan on going can be helpful. This allows you to determine the financial moves required to accomplish your goals in the coming days, weeks, and years. Steps include:

  •  Establishing your current financial progress.
  •  Setting goals.
  •  Implementing your plan.
  •  Continuing to evaluate your strategy to make sure it still matches your current situation.

Know where you stand today

A good first step in the financial planning process is to gain a big-picture view of your finances by taking stock of all of your financial accounts. Take note of your monthly income, your regular bills, outstanding debt, and how much you have in savings. As you enter the process, you may decide you would prefer assistance creating your financial plan. Finding a financial professional can offer helpful guidance and advice to set you up for success.

Look toward the future

Either working independently or with a financial professional, you will need to identify the short- and long-term goals that support where you want to be financially in the future. Do you wish to pay off your car? Save to buy a house? Or put aside money for retirement? Once you have outlined your goals, you can build a plan around those objectives, determine how much money is needed for each, and which tools and solutions can help get you there.

Put your plan into action

With your goals laid out, now it’s time to put your plan into action. This means looking at your monthly budget and determining how to break down expenses, cut unnecessary spending, and allocate income toward savings goals. If one of your to-do’s is to pay off credit card debt in the next six months, take the total amount due, break it into six payments, and set up an automatic payment. Using auto pay and automatic deposits when possible helps make staying on top of your finances easier and allows you to work toward your goals more efficiently.

Evaluate progress and make updates as needed

Once your plan is in action, it’s important to check back in periodically to see if you’re making progress or if you’re falling behind. The dates you set for certain goals act as guideposts where you can measure if the timeline still makes sense, if you have the necessary income to put toward this goal, and if the priority of this goal still makes sense in your current situation. If working with a financial professional, you can take your successes or struggles into account to refine the plan to be more manageable. Remember, your financial plan changes as your life changes, so regularly revisiting your goals and setting aside time for an annual financial checkup can help keep your financial plan current and in line with your vision for the future.

What should be in a financial plan?

Now that you know what to expect from the process, it’s time to put this information to work with a detailed financial plan. Just like a bicycle has several parts working together in tandem, a comprehensive financial plan has multiple parts that support each other to accomplish your set goals. Your income feeds into your budget; your budget breaks down this income into money for expenses and financial goals, and those goals all tie together to make up your overall plan. Here are some of the key elements you’ll want to include as you build your financial plan.

Short- and long-term financial goals

Your goals are the core component of your financial plan and create the foundation to build your strategy. It’s important to have short-term (within the next five years) and long-term goals (after ten or more years) and organize them in order of priority and timeline.

Your current net worth

Take inventory of your current assets, such as bank accounts, investments, and property owned, and compare them to outstanding debts, like student loans, mortgage, and credit cards. As you get started, do not be alarmed if your debts outweigh your assets. Having a financial plan can help you begin to reduce those debts and grow your assets over time.

A budget you can stick to

Once you’ve evaluated all of your debts and assets, you can then establish a budget and determine which areas you want to cut back spending and where your income can make the most impact.

Debt management

Not all debt is created equal. If you have a mortgage, for example, this can help build equity. However, credit cards are a type of high-interest debt, and if you do not stay on top of your payments, your balance can grow quickly and can affect your credit score. Every financial plan should include a debt management strategy.

Emergency fund

Building an emergency fund can help you be financially prepared for the unexpected, like the loss of a job, car or house repairs, or a medical event. With money set aside, you won’t have to tap into savings or increase credit card debt.

Retirement goals

It’s never too early to start saving for retirement. There are many tools to help you build assets for the future, including investments, 401(k)s, IRAs, and annuities. If your employer offers a retirement savings plan, be sure to take advantage of this benefit.

Insurance coverage

Having insurance coverage in place can help protect different aspects of your financial life, as well as the lives of your loved ones. Coverage options can include health, home, car, and life insurance.

How does insurance benefit a financial plan?

Factoring insurance into your financial plan can help add security and predictability by protecting your assets in the event of an emergency or unexpected event. Typically, you’ll have a predetermined benefit amount, so you’ll know exactly how much money you can count on if something happens. When you purchase life insurance, you safeguard your family’s future and can help them pay off debt, cover final expenses, and keep up with day-to-day bills.

Reap the benefits of a financial plan

A financial plan can get you on track to meeting your goals, so you can live a more fulfilling and financially fit life. Financial planning helps:

  •  Improve your financial stability
  •  Prioritize your spending so money goes toward where it’s most needed
  •  Increase financial literacy and allow you to develop lifelong money habits
  •  Lower money-related stress and worry
  •  Promote confident financial decisions

Set yourself up for long-term success with personal financial planning

Midland National is here to help you secure your financial future and offer guidance on the benefits of adding annuities and life insurance to your overall portfolio. Taking steps to build your financial plan can have an impressive impact on your future and helps outline the resources needed to achieve your goals. As you develop your strategy and gain new money knowledge and skills, you further shape your financial life and help create more financial security and stability for the years ahead.


The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.