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Retirement, Investments, & Insurance for Individuals Build your knowledge A
step-by-step guide to build a personal financial plan


A STEP-BY-STEP GUIDE TO BUILD A PERSONAL FINANCIAL PLAN

Create a unique-to-you, start-to-finish plan for all your money goals with tools
and resources to help you succeed.


3 min read | December 18, 2023

When it comes to life's biggest moments, you probably had a plan. Your wedding,
for example, followed a timeline, a budget—even if you busted it with that
last-minute table for extended family—and involved compromise and conversation.
Smart financial planning follows the same logic.

Our how-to articles (linked below) can help. They take you step-by-step through
what you need to know to create a personal financial plan and help get your
money in order. From the groceries you need, to the retirement you want, and the
car repair bill that’s looming, these ideas help you balance long-term dreams
with short-term wants, plus those unexpected events that happen along the way.

In nine steps, you have a nice framework you can build on and adjust throughout
your life.

It’s OK if you’ve started on some of these tasks. It’s also OK if you haven’t.
Just start with one and keep going. (Or tackle the whole thing on a long, rainy
weekend with a big pot of coffee and the dog at your feet.)

Let’s get started.


1. SET FINANCIAL GOALS.

It’s good to have a clear idea of why you’re saving your hard-earned money.
Think it through with a five-step guide to setting yearly financial goals
(worksheet included).


2. MAKE A BUDGET.

Instead of thinking of a budget as way to restrict your spending, use it as a
tool to organize your monthly cash flow to help you pay yourself first
(savings/investing)—and still have room for the fun stuff. Learn how to create a
budget that works for you—not against you. (Downloadable budgeting sheet
included.)


3. PLAN FOR TAXES.

It can go a long way toward helping you keep more of your money. Explore ways to
save on your taxes next year, using our tax planning worksheet to think through
potential income tax credits and deductions.


4. BUILD AN EMERGENCY FUND.

All the planning in the world won’t help if life throws you a curveball and
you’re not prepared financially. That’s where emergency savings comes in handy.
Our guide to building an emergency fund includes to a calculator to help you
figure out how much you need to save and teaches you how to maintain it over
time.


5. MANAGE DEBT.

Understanding and managing debt is a key part of creating a financial plan.
Learn how to pay off the debt you owe now and build a long-term debt-management
strategy (worksheet and calculator included).


6. PROTECT WITH INSURANCE.

Life can change in an instant. People with a good financial plan hope for the
best, but plan for the unexpected. Insurance helps with that. Learn the basics
of life and disability insurance (and use our disability income calculator to
assess your needs).


7. PLAN FOR RETIREMENT.

Even if it’s a long way off, think about what you want your money to do for you
when you retire, and create a retirement plan to help make it happen.


8. INVEST BEYOND YOUR 401(K).

To reach your mid- and long-term goals, take your savings strategy and put an
engine behind it. That’s what investing can do. Get started in three steps.


9. CREATE AN ESTATE PLAN.

You don’t have to be wealthy, old, married, or a parent to need an estate plan,
which also lays out who makes financial and health care decisions for you if you
can’t make them yourself. Learn the basics of estate planning and options for
creating one.


FINISHED? HERE’S WHEN TO REVIEW YOUR FINANCIAL PLAN.

Take a fresh look at least once a year or after a big life change, such as:

 * Significant change in income
 * Job change
 * Change in family dynamics like having a baby or adopting, getting married,
   divorced, or losing a spouse/partner
 * Selling or buying a home
 * Inheritance
 * Unexpected debt
 * Change in financial goals

Tip: Around age 50, you may want to consider long-term care insurance and expand
your financial plan to include income in retirement.


WHAT’S NEXT?

Log in to your Principal account to see how you’re doing. Don’t 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. Ready to continue
building your financial foundation?


Financial planning
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--------------------------------------------------------------------------------

The subject matter in this communication is educational only and provided with
the understanding that Principal® is not rendering legal, accounting, investment
advice or tax advice. You should consult with appropriate counsel or other
advisors on all matters pertaining to legal, tax, investment or accounting
obligations and requirements.

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