What is a Personal Financial Plan?

We hear it everywhere: you can be whatever you want to be. While that can definitely be true, it’s common for you to get in your own way. Here’s what I mean: You can achieve whatever you want to achieve in your life. Your only limitation is you. There are things you’re good at and things that you’re not so good at on which you can improve. No, I’m not talking about things like basketball or geometry. I’m talking about the hidden skills you may not yet know you have; sure, you’re a good basketball player, but it’s because you’re great at working with a team, or you’re good at geometry because you’re great at logically thinking through a problem.

Since this is a course about money, we don’t want money to be the limiting factor when you picture your future. We can remove money as a limiting factor by having a plan, and sticking to a plan is definitely a skill that can be developed. A financial plan is simply the money pathway by which you achieve the life you want—like an outline. It includes what to do in case of emergencies, considers what to do with extra money, can be adjusted as goals change and “life happens,” and should have rewards built in. Sticking to a financial plan can be difficult at times and requires the ability to not give in to emotions, which can be difficult to do. You have to have self-restraint and be able to fight against the part of your brain that wants to impulsively spend money in order to stick to your financial plan.