With the right tools and resources, including tips on investing beyond your 401(k), you can map out a personalized financial plan from start-to-finish to help you succeed on all your financial goals .

When it comes to life's biggest moments, you probably had a plan. Your family vacation, for example, followed a timeline, a budget鈥攁nd some compromise and conversation. Creating a personalized financial plan follows the same logic.
Not everyone is at the same stage in their financial journey. Perhaps you鈥檝e mastered the art of building an emergency savings fund and paying down debt. Or maybe you鈥檝e never even thought about a budget, much less a financial plan. The information, steps, and links below take you through the foundation of a financial plan, all the way through more complex goals and priorities.
From the groceries you need to the retirement you want and the car repair bill that鈥檚 looming, these ideas can help you balance long-term dreams with short-term wants and unexpected events. Plus, it鈥檚 adaptable鈥攂ecause the best financial plans evolve through job changes and life鈥檚 challenges. Figure out where you are on this list, and get started.
1. Set financial goals.
Before calculating how you鈥檒l accomplish something, you need to decide why you want to do it in the first place鈥攜our goal. The same is true with a financial plan: You need to identify what you want to achieve financially and why. They may be highly specific or kind of generic, such as:
- Saving a 20% down payment on a new home
- Establishing a college education fund for your children
- Paying down or minimizing debt
- Launching a small business
- Accelerating retirement savings
Once you鈥檝e created a list of goals, you can probably sort them into three time-frame buckets. Those are:
- Short-term financial goals (six months to five years): What can accomplish relatively quickly? This may include paying down a debt and starting an emergency fund.
- Mid-term financial goals (five to 10 years): These financial goals probably feel relatively achievable, but may take a little bit of planning and saving. For example, you may have to gradually put money aside for a down payment on a home.
- Long-term goals (10+ years): The difficult part of a long-term goal is, while it is far enough in the future to feel less tangible, it鈥檚 probably also big enough that you鈥檒l have an easier time reaching it if you start planning now鈥攆or example, paying for a few years of college tuition. It may take insight from someone like a financial professional to help.
If you can, attach specific timing to a goal. Say you鈥檇 like to set aside at least two years of college tuition for a child who is now three years old. You have about 15 years to do that.
Lastly, so you can build in some flexibility to your thinking, identify your financial goals as either needs and wants. You need to pay off your debt; you want to own a vacation home. That gives you some room to adjust through the years and as priorities change.
Tool: Record your decisions .
2. Establish and follow a budget.
A budget isn鈥檛 about restricting your spending; it鈥檚 a way to plan to reach those financial goals. Your budget should include all sources of income and expenses. One way to organize expenses in your budget is fixed expenses (think housing, transportation, debt, etc.) and discretionary expenses (restaurants, entertainment, gifts, etc.). The more detail in your budget, the better you鈥檒l be able to spot pockets of opportunity鈥攚here you can tuck away more for retirement or allocate a little extra to an emergency fund.
When you create and manage a budget, lean in to what works best for you. Some people favor a spreadsheet, while others use a digital app or online tool. (You can create and track your budget in your 麻豆最新出品 dashboard. Log in and scroll down on the dashboard page to the 鈥淵our budget鈥 section.)
Tool: Learn how to create a budget that works for you, with a downloadable budgeting sheet included.
3. Build an emergency fund.
All the planning in the world won鈥檛 help if life throws you a financial curveball and you鈥檙e not prepared: Just over half of all adults have three months of emergency savings put aside.
- Calculate how much emergency savings you may need. There are recommendations鈥攖hree months of living expenses is one鈥攂ut those can sometimes feel out of reach. Instead, consider how much you鈥檙e reasonably able to set aside. Start small, if you must, but just start: $100 a month over time adds up.
- Pick a saving method. Automation makes it easy, but you may like to transfer small amounts as you鈥檙e able.
- Choose where you鈥檒l save. Emergency funds are designed to be accessible, but not impulsive. Perhaps it鈥檚 as simple as a separate savings account.
- Decide when it鈥檚 OK to use the emergency fund, and how you鈥檒l replenish it. One option: Is the expense unexpected, unavoidable, and urgent? If so, it鈥檚 more likely you need to use an emergency fund. And, much like it took time to build the fund, it may take time to build it back up.
Tool: Find steps to create and accelerate your emergency fund.
4. Manage debt.
The average American household carries a debt of over $104,000
- The snowball method prioritizes paying smaller loans first, giving you a feeling of immediate progress that you can build on.
- The avalanche method suggests paying off loans with the highest interest rates so you pay less overall, even if you have more loans for longer.
Why does managing and paying off debt matter to your financial plan, in both the short and long run? Debt impacts credit scores, and a higher credit score generally equals a lower interest rate on big ticket items like homes and cars. In addition, debt like credit cards has a higher interest rate, which means purchases that linger on your balance end up costing you more.
Tool: Learn how to pay off the debt you owe now and build a long-term debt-management strategy (worksheet and calculator included).
5. Review your insurance, especially disability and voluntary insurance benefits.
Disruptions to your life鈥攁nd your financial goals鈥攂ecause of disability happen more frequently than you might realize: A disabling condition will push one in four of today鈥檚 20-year-olds out of work for at least a year before they鈥檙e retired.
If you鈥檙e employed, you may have some sort of disability insurance through work, but it鈥檚 worth investigating how much it is, and if you can or want to purchase more. Check with your HR department; one key question to ask about is the elimination period, or how long you would wait to receive benefits if you do become disabled. And, a financial professional can help you determine if your coverage level is high enough to protect you and your family.
As part of your financial plan, take time to dig into voluntary benefits if you have them, some of which may help your savings goals from getting derailed during big life events. For example, hospital indemnity insurance helps cover costs during accidents, illness, or maternity care; typically an employer doesn鈥檛 purchase it but may offer it for you to purchase, should you wish.
Tool: Use the disability income calculator to figure out how much disability insurance you may need.
6. Plan for taxes.
Paying taxes is part of your inevitable financial routine. How do you plan for them? First, know your current tax bracket and check with your tax advisor to ensure you鈥檙e not having too much (or too little) withheld. It鈥檚 also a chance to review deductions and credits, and better understand how saving in different accounts, from Roth IRAs to 401(k)s, affects your taxes. If you have access to a benefit such as a health savings account and expect to use it to pay for out-of-pocket medical costs, that could help reduce your overall tax burden. If you鈥檙e age 50 or older, you may be able to make catch-up contributions with your retirement savings.
Tool: Use our tax center on principal.com for information on ways to save on taxes and a tax planning worksheet.
7. Start saving for retirement as soon as you can, and as consistently as you鈥檙e able to.
Heard the adage, 鈥淚t鈥檚 not timing the market, it鈥檚 time in the market鈥? What that means is, the longer you鈥檙e able to save for retirement, the more years your savings have to possibly grow. Perhaps when you鈥檙e starting your career, you鈥檙e only able to save enough to get the match from your employer for your 401(k). That鈥檚 OK. When you鈥檙e able, start layering in other savings funds and opportunities, from a post-tax Roth IRA to a pre-tax IRA. That will give you more options as you get closer to your own retirement. And know that, like many people, your savings may ebb and flow as other goals come into view; that鈥檚 the whole point of revisiting your financial plan on a regular basis.
Tool: Create your own custom retirement plan to help you take a more holistic approach to retirement.
8. Diversify your savings.
To reach your mid- and long-term goals, take your savings strategy and put an engine behind it. That鈥檚 what investing can do. Does your timeline and risk tolerance favor a more conservative approach, with options such as government bonds or certificates of deposit? Or do you prefer more aggressive investing in stocks and private equity? Regardless, diversifying your investments can help you generate more consistent returns over time to withstand volatility. To understand how to take a thoughtful, diversified approach鈥攊ncluding regularly rebalancing your portfolio to account for market shifts and life stages鈥攃onsult a financial professional.
Tool: Learn the basics of broadening your investments with these three steps.
9. Create an estate plan.
In the simplest terms, an estate plan details who makes financial and health care decisions for you if you can鈥檛 make them yourself. You don鈥檛 have to be wealthy, old, married, or a parent to need an estate plan. An estate plan, ideally including a will, enables you to clearly articulate your intentions for your assets after you鈥檙e gone. Who will wield power of attorney on your behalf? Will you include a living will in case you鈥檙e incapacitated and unable to communicate your wishes?
Tool: Learn the basics of estate planning and options for creating one.
The last step: Regular reviews of your financial plan
Put time on your calendar once a year to review and adjust your financial plan. And, if you have a big life change, changes may be necessary, too. Those include:
- Significant change in income
- Job change
- Change in family dynamics like adopting or having a baby, marriage, divorce, or death of a spouse/partner
- Selling or buying a home
- Inheritance
- Unexpected debt
- Change in financial goals
What鈥檚 next?
to see how you鈥檙e doing. Don鈥檛 have an employer-sponsored retirement account or want to save even more in addition to a 401(k)? We can help you set up your own IRA or Roth IRA. If you don鈥檛 already work with a trusted financial professional, we can help find one near you.