8 Practical tips for building a financial plan

Whether you’re looking to buy a house, save for retirement or get a handle on your finances, a solid financial plan can help you define and achieve your goals.

Below we explain what a financial plan is and share eight practical tips to help you create and maintain a plan that gets your money working hard towards your future.

What is a financial plan?

A financial plan is essentially a roadmap for your money. It helps you set financial goals and develop a strategy to achieve them.

A good financial plan is based on a thorough understanding of your income and expenses, ensuring you know exactly what’s coming in and going out of your accounts. That knowledge helps you identify anything left over that you can put towards saving or investing to grow your wealth for the future.

Effective financial planning can include debt management to make sure you pay off any loans or credit card bills, or planning for retirement to shore up your financial security in later life.

Keeping enough money aside for emergencies is another crucial part of financial planning, as well as looking at insurance and protection options to help safeguard yourself and your family.

This might sound like a lot right now but following just a few simple steps can make a big difference to your financial health in the long run.

A good financial plan, even a simple one, can help you focus on what matters to you, offer security and peace of mind, and give you the confidence to make informed decisions about your finances. Let’s get started with eight simple things you can do to start building a financial plan.

BSG's 8 essential tips for creating a financial plan

1. Set clear goals

Your financial plan should be built around your personal goals. Write down all the big things you’d like to achieve with your money and try to make them as specific as you can. For example, instead of simply aiming to save for a deposit on a house, aim for a target amount in a specific number of years.

Dividing these aspirations into short, medium and long-term goals can help you prioritise them and give structure to your financial plan.

2. Create (and stick to) a budget

Budgeting is the foundation of financial security. Consider using a budgeting tool, or even a simple spreadsheet, to track your income and outgoings and understand where your money is going on a monthly basis.

Allocate some of your income for saving to ensure you’re consistently putting money away for the future. A useful guideline is the 50/30/20 rule, where 50% of your income goes towards essential expenses, 30% goes towards personal spending and 20% is put into savings.

3. Build a fund for emergencies

Having a readily accessible financial safety net can prevent minor setbacks from turning into major headaches. A good rule of thumb is to keep three to six months of essential spending tucked away in an easy access savings account to cover any unexpected events (like a boiler repair or loss of income).

4. Manage debt wisely

Not all debt is bad, but unpaid high-interest debt (like credit cards) can really hinder your financial progress. Prioritise paying off high-interest debts first and try not to take on new debt if you can avoid it. You might want to consider consolidating any existing debts, but it’s important that you seek financial advice to establish if this is a good approach for your circumstances.

5. Start saving and investing early

Consistently putting money away is essential for long-term financial stability and the earlier you can start, the better. Even small, regular contributions can accumulate over time.

Consider options such as ISAs for tax-efficient savings, workplace pensions to take advantage of employer contributions and stocks and shares ISAs for long-term investments. If you’re new to investing, then seeking advice can help you understand the options available to you and help you make informed decisions.

6. Plan for your retirement

It’s never too early to start thinking about retirement. The sooner you start planning for later life, the more time you have to grow your retirement pot. The UK State Pension provides a fair foundation, but most people will probably need additional savings to maintain their lifestyle in retirement.

Paying into a workplace or private pension scheme can be an effective way to build your retirement pot, but pensions can be complex so consider talking to a financial adviser if you want help understanding your options.

7. Protect yourself with insurance

Financial planning isn’t just about saving money, it’s also about protecting what you already have. Different types of insurance provide different types of protection so it’s worth thinking about what sort of cover you need.

Life insurance, for example, provides financial support to your loved ones after you pass away, whilst critical illness cover pays out a lump sum if you’re diagnosed with a serious illness. Home and car insurance, meanwhile, help protect your most valuable assets from loss, theft or damage.

You may already be covered by insurance (e.g. through your employer) so check your existing cover before you buy a new policy, consider shopping around to make sure you find a good deal and thoroughly read policy documents to make sure you’re getting the cover you need.

8. Review and adjust your plan regularly

Things can change and it’s important that your financial plan adapts accordingly. Reviewing your financial plan at least once a year (or after a major life event like a marriage, the birth of a child or a change in employment) will help keep your financial plan firmly focused on your long-term goals.

Plan and adapt with confidence

Financial planning doesn’t have to be a challenge. Starting with small steps, staying consistent and making necessary adjustments over time can have significant impacts over the long term. You can use the tips above to set your foundations and start building towards your future with clear goals.

Approved by The Openwork Partnership on 06/03/2025.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.