Effective Personal Financial Plan Template by Invest Manila

How to Create a Well-Thought-Out Personal Financial Plan?

Preparing a well-thought out financial plan can be difficult especially if you don’t know where to start. The fact that you’re looking for guidelines on how to do it means that you already know its importance. It’s basically your first step in reaching your life goals.  So, great job for finding ways to make them happen.

Here are some helpful tips on how you can create your very own financial plan: 


It is important to enumerate your goals first, because they will become your guide in identifying the steps you need to take before you can start creating your financial plan. Preferably, separate your short-term goals from your long-term goals. The short-term goals are the ones which can be done within 2 years time. Defining which one is short-term and long-term is completely up to you. You just need to weigh which one matters to you most. For example: travelling in a new town or country will most likely fall into a short-term goal, while setting up your retirement fund will most likely fall into your long-term goals.

2. Correctly Defining your ASSETS and your LIABILITIES.

Here is the tricky part. Some people have clouded judgements when doing this task because they are inclined to put more into the Assets list. They reason out and make theirselves believe that the family car they bought is definitely an asset because they paid it in full. For them, the only thing that should make into the Liabilities list is if it were purchased under a loan. Below you’ll find a series of Q&A which can help you in segregating assets and liabilities. The common misconceptions have been listed so you may put it under the proper column.

  1. Is it income-generating?

    For example, if you own a rental property unit, a public transport vehicle or a franchising business, check first if your monthly income of this purchase is greater than its monthly expenses. This will include but not limited to (1) the monthly loan needed to be paid if applicable, (2) monthly taxes and accreditation expenses required by the government, (3) maintenance fee, and etc. If you’re sure that you’re getting monthly profit despite all those expenses, then you may list it in your assets column. (ASSUMPTION: your return of investment for these acquired assets has been met or should be attainable in the future due to positive cash flow.)

  2. Does your purchase involve capital appreciation?

    For example, if you own a pre-selling condominium unit, house and lot, gold, etc., and you purchase them without loan. Then, you may list it in the Assets columns too. Note: cars or privately vehicles are not included since they depreciate in value over time.

  3. How about classifying other form of investments?
    • Life insurance: you may put it in the assets category regardless if you’ve fully paid it or not. The reason behind it is that most life insurances will execute the contract and pay you as soon as the conditions of the contract are met, even if it’s not yet fully paid.
    • Stocks, cryptocurrencies, forex, mutual funds, UITFs or bonds: Only classify it as an asset if it has a positive percentage or currently profitable.
    • Time-deposits or savings in the bank: you may put under the assets column. Just remember to update its current amount from time to time to keep you on track.

3. Record your Income, Savings and Expenses. 

Making a record of your cashflow, both positive and negative, will help you analyze every bit and detail on where your money goes. Also, tracking your expenses can help you check if there are areas which can be improved. When recording your personal cashflow, make a column for your income, savings and expenses. As you’ve notice, I always mention the “expenses” last because we should follow this general rule: income – savings = expenses. This means that it’s a must to set aside an amount first for your savings before spending your income.

If you feel that your income is not enough to shoulder your basic expenses, then it’s a sign to look for another source of income. Also, it will help a lot if you’ll be specific in your monthly and yearly financial targets. Have projections on how much do you think you can save in a year based on your fixed monthly savings.

4. Make a Realistic Financial Plan.

Now that you have the list of the things above, you’re now equipped to finally start creating your financial plan. Here’s another list which you can follow as you create your plan.

  • First things first, MINIMIZE YOUR DEBTS or LOANS. You will never achieve your future goals if you think you can getaway without paying your debts. Truly I say that you will fail achieving financial success if you’ll start off with the wrong foot. That’s why you need to make a plan on how you can minimize your debts so that you’ll be able to pay it fully in the near future. According to the book “The Richest Man in Babylon”, you can pay debts by automatically setting aside part of your monthly income and consistently pay it to your creditor. It may take a while before you can fully pay your debt as it will depend on your cashflow. Still, make sure to arrange an agreement with your creditor, so that everything will be aligned as it should be.
  • Second is to BUILD AN EMERGENCY FUND. This is an important step that should not be skipped because you can use this money someday when something unexpected comes up like losing a job or a sudden sickness within your family. The ideal amount of an emergency fund is 3 to 6 months worth of your monthly expenses.
  • Third is to GET AN INSURANCE (both life and health insurances) for you and your family. This is important for it will protect your future money and investments when a serious illness or a death of a family member suddenly happen. Surely, your emergency fund won’t be enough to shoulder this kind of misfortune. Be prepared and choose a credible life insurance that can cater to your needs.
  • Fourth is to MAKE MULTIPLE SOURCES OF  INCOME. If you’ve reached this far, now is the exact time to invest your money wisely. You can put up a business or keep your money safe in an investment which you think will generate higher interest in the long run. Repeat step 4 as much as you like until you generate enough passive income that can support you when you retire. Once you’ve done these specific 4 step guide, surely your financial freedom is just right around the corner, welcoming you with open arms.

5. Track your Monthly Accomplishments.

Of course, a plan should not end with just that. It’s hard to accomplish a plan if dealt in a macro scale. You will need specific action item so you’ll know that you’re actually becoming closer to your goal. We suggest that you make a monthly list of the top 5 important tasks that you need to do in order to get closer to your goal. Then, in the middle and end of the month, revisit this list. Track if you’re able to do it or not. Tracking your mini accomplishments is important for it will help you to be aligned with your goals. Remember, everything begins in a simple step.


Thank you for making it this far, as a reward for reading this lengthy article, we’re giving away FREE PERSONAL FINANCIAL PLAN Template in powerpoint and keynote file type, which you can use as a guide for creating your personal financial plan. We used a presentation type of document, because it’s necessary for you to feel that you’re presenting your goals to someone whenever you revisit it. If you’re a professional who’s working at the office, it’s a feeling of presenting your yearly goals to your manager. Yet, this time you’re presenting it to yourself because you’re the only one who is in charge of your finances. How to download? Subscribe to our email list and we’ll send it to you for FREE.

Is this article been helpful to you? Share it with your family and friends. Together, let’s embrace our financial freedom.