5 steps to plan your financial life

Step 1 - Develop your ideas for what you want in your life

This is about finding out what’s really important to you and developing ideas that will inspire you – and is about much more than just money, because a lot of the things we value most in life cost little or nothing at all. So, invest some ‘quiet’ time at this stage to carefully consider what really matters to you. What do you want for yourself and your loved ones for your longer-term future? And don’t worry if you’re not clear on what you want right now - it takes time to gain clarity on what you want in life and your ideas can also change over time.

Step 2 - Check if you’re on track to achieve your life goals

From your life goals in step 1, pick out the items with a financial cost attached and work out if you’re on track to achieve them.

• For shorter term goals where you’re using bank savings, you can check if you’re on track by using this Savings Calculator.
• For your longer term retirement goal, ask your employer or the pension scheme provider what tools they have available or use this free Pension Calculator.
• To carry out a simplified analysis of your overall financial plans use this free Financial Planning Tool.
• Make sure you get help from a competent financial planner if you’re not good with numbers or unsure what assumptions to use at this stage.

Step 3 - Adjust your plan to get on track and stay there

Explore how you’ll adjust your financial plan (if you need to) to get on track with your goals. You might have to delay some of your goals to make your longer-term savings go further. But before doing that, think about:

• Ways to earn more (or waste less) so you can save more toward your goals
• Making smarter investment choices to take advantage of investment returns, tax breaks and other ‘freebies’ to effectively reduce the cost of your goals

You can also read this article to help you understand how to choose the right investments for you.

Step 4 - Plan for the unexpected

Think how your plan for yourself or your loved ones would be affected if:

• You (or your partner, if you have one) suffered a long spell of bad health or died unexpectedly
• There was a crash in stock market or property prices - or a big rise in mortgage rates. You can talk to a financial planner about insuring against these disasters. It might cost a lot less than you think. Visit Unbiased to find a regulated advice professional.

Step 5 - Put the plan into action

Change your saving and spending habits as necessary and set up any investment or insurance products you need to help you reach your goals. Where possible, be sure to automate your payments into those products. That way you can forget about your longer-term finances between, say, annual reviews – and get on with the more interesting aspects of your life.