S1 EP8 Plan

April 1, 2021

One thing that differentiates a successful person and someone who is not, is having a PLAN.


In this episode we will dive closer to the term Financial Planning.


Financial Planning is such an important process that could help you achieve your financial goals. You are creating the very blueprint to your financial life. It will be a guide you will carefully consider before taking any financial decision. No matter how small or big your goal is, as long as you properly plan and execute the steps, know that nothing is impossible.


Why is Personal Financial Planning important?

  • To help you manage your income and expenses.
  • To create an awareness of your current financial status.
  • To develop goals and devising ways to achieve those goals.
  • To provide a system of assessment for your financial progress.


What are the Key Elements of a Solid Financial Plan



A solid financial plan starts with a vision. It’s all about your goals… how you see your financial situation in 5, 10 or maybe 20 years from now.


Lack of vision or goal in mind is more often than not the first thing that makes a person fail in their plans. There’s no bigger picture to look forward to. The map is useless for there is no destination at all.


Your goals for your financial life must be strong enough to encourage you to act. There’s a great quote for this that I saw once, “If your goals don't scare you , they are not big enough.” That’s a big moment of awakening for me. At some point your goals may seem too impossible to achieve especially in terms of finances, but don’t fret… goals are meant to be just like that.


Current financial net worth

Once the vision is laid down you want to know your starting point and knowing your current financial net worth will reveal this.


Your net worth is the difference between your assets and liabilities. It is a fundamental personal finance metric that shows how close you are to achieving financial freedom.


In mathematical term:

Net Worth = Total Assets – Total Liabilities



A budget is an estimate of your income and expenses over a set period of time. Normally done on a monthly basis, budgets work to:

  • Allocate your salary/income/money wisely
  • Know how much is coming in and going out in your cash flow
  • Identify the areas where you can spend less to save more


Budgeting is one financial task we all must do. It is like setting your to do list for a new day, when you make one you are able to define and make a plan on one of the most valuable resources we have as humans – money.


Emergency fund

An emergency fund will make you at ease along your journey to financial freedom. Your financial planning will never be solid without a 3-6 months worth of income money reserve.


An emergency fund is the first thing you should secure before any other financial goals like buying a house, a car or saving for retirement.


Debt management

Manage your debt as early as possible if you want to be even with your finances. Your debts can become a big loop hole in your finances. Make sure that you have a plan on how you will pay your debts.


For credit card debts pay the highest interest rate first followed by the debt with the lowest interest rate. For personal debts try to talk with your creditor on a better payment method that agrees within what you can pay for.


Try to be out of debt as much as possible. Live below your means. Be better in handling your money and do not live a lifestyle to impress people.


Investment Plan

With an investment plan you'll define the best investment options to reach your goals. Investment planning is core component of financial planning. You want to match the most suitable mixture of investments to each of your specific goal. Your investment plan should outline what you’re planning to use the money for, how long you’re willing to leave it invested and what vehicles you put your money into to achieve your goals.


Estate Plan

Estate planning is all about protecting your loved ones.


We cannot opt out estate planning in a solid financial plan. It is an essential part of anyone’s personal finances, whether or not you are super-rich.


I do believe the topic on estate planning is a broad topic and it is personal as well. In future blog posts or podcast episodes we will surely talk about that.


How to Create Your Own Personal Financial Plan


There is actually no set template for a Personal Financial Plan. But in this episode I will be sharing the steps you can do in order to create one from scratch.


Step 1. Determine your current net worth

The first step in creating your personal financial plan is determining your current financial situation.


You need to have a grasp on where you are financially, what are your assets and liabilities, where you are currently invested, how much is your savings, etc. I do have a post all about net worth if you visit the blog www.savingspinay.ph.


Step 2. List down your financial goals

Once you have your current net worth determined, the next step is to set new or better financial goals. If net worth is your starting point, your goals will be where you are headed.


From your current financial net worth, find which areas do you need to work on. Establish what your priorities are.


You can listen to Episode 5 of The SavingsPinay Podcast for more information on how to set goals.


Step 3. Formulate your next actions

Don’t stop with just a list of financial goals. Thoroughly see through what your next actions will be.


Here are common next actions in order to achieve your financial plan

1. You need to make a budget that works.

2. You need to follow the golder formula, Income – Savings = Expenses

3. You need to correctly spend your money

4. You need to invest and let your money grow

5. You need to get serious about retirement.


Step 4. Act

Once you have all the basics covered it’s time to implement your financial plan. Make sure you list down your goals based on their priority and whether it’s something you can achieve in a year, 3-5years from now or longer.


You want to create a path based on the goals you’ve set and the next actions you included. After mapping the path, it’s now up to you to stay disciplined and follow the path.


Act on your next actions until you reach your desired goals.


Step 5. Review your progress and revise your plan

Last but definitely not the least, is to review your progress and revise your plan accordingly.


No matter how good or extensive your personal financial plan may be, life happens. Along the way there should be hindrances that are beyond your control. Your financial situation may change from time to time. Make sure that you go back to your plan and review it. Revise goals that are no longer relevant to you.


How often should you make a financial plan?

It’s important to create a financial plan at least once a year especially if you experienced any of the following:


Significant change in income

Change of job Life’s milestones – getting married, having a baby, buying a home

Unexpected debt

Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at izza@savingspinay.ph


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