6 Steps You MUST Know to Create a Personal Finance Action Plan Today

If you really need to get your finances in check, but you don’t know where to start, you’ve come to the right place!
Now that you’ve gone through the Personal Money Assessment, you know where your finances currently stand.

You’ve figured out the broad picture – what’s going well, what could be better, and where you need to step it up.

Now, it’s time to come up with an action plan to
get you to where you want to be.

Unfortunately, there isn’t a magic wand that will make everything instantly better.

But, these six tips will help you come up with a plan to start addressing the issues and get you seeing some results.

Do This First

If you haven’t completed the Personal Money Assessment already, I strongly suggest you stop reading now and get to it. You can’t put together an adequate action plan if you haven’t taken the time to assess your current state.

Completing the assessment will also help you understand this post better.

Analyze and Make S.M.A.R.T. Goals

Before we jump in, let’s talk about the biggest favor you can do for yourself while coming up with an action plan. Be as analytical as you can be.

If you want to come up with a plan that makes sense, has a clear direction, and will actually help you reach your goals, be analytical.

A good tool to help you is to use S.M.A.R.T. goals as your guide. Every strategy and tactic you are left with at the end of this exercise should be specific, measurable, attainable, realistic, and timely.

If you use S.M.A.R.T. goals, your plan will be more robust, and that makes it more likely to succeed.

How to complete this exercise

The 6 steps below are exercises meant to help you create a personal finance action plan.

This is just a guide. It’s based on my opinions and experiences, and you need to personalize it for your situation. The steps are general and rely on you thinking through your own situation.

So grab your computer, a pen and paper or whatever else you want to write with. And, let’s talk about six steps to help you create a financial action plan.

1. Figure out your motivation

Before you can succeed at fixing a problem, you need to know why you’re doing what you’re doing. Essentially, you need to figure out what your end goal is.

To figure out what your goal is, you need to dig deep. This is the foundation your action plan will be built on.

If you don’t know the reason why you’re doing things, you’re probably not going to get anything done. So, ask yourself, “Why do I want to change?”

Don’t sell yourself short with a goal like, “I want to pay off my debt and have money in savings.” This doesn’t tell you why you’re doing what you’re doing.

Make sure your goal has meaning. Make sure your goal gets to the root of your determination and will remind you why you’re doing what you’re doing when times get tough.

For example, “I will be financially independent so I can live a fuller life and truly focus on the things that really matter – my health, my family, and my beliefs.”

Regardless of what your “why” is, write it down. Put it somewhere that will frequently remind you of why you’re changing and let it encourage you to keep going.

2. Review your financial assessment, list problem areas, assign priorities

During the Personal Money Assessment you probably flagged issues at the end of each exercise. If you didn’t do that, for whatever reason, do it now.

Flagging issues means identifying the gaps, holes, or problems holding you back from reaching your goal. Once you’ve made your list, categorize each item as a high, medium or low priority.

Assigning a priority is really subjective. What is a huge deal for one person might not be for another. It all depends on where you’re at.

A good idea is to come up with a rubric for what you consider to be high, medium, and low priority before you start. What’s the timeline for each? What impact will it have if it’s not addressed?

I’ll walk you through examples of each kind of priority below. Just remember that this isn’t written in stone. Analyze it and figure out what makes sense to you.

Potential to Devastate Finances = High Priority

A high priority item is something that has a big impact on your finances and needs to be addressed urgently. If it is not addressed urgently (I consider this to be within a month to a month and a half), it could devastate your finances.

For example, if you are spending $600 more than you make each month and you only have $500 in savings, with no valuable assets you could sell, fixing this issue is a high priority.

Important But not Urgent = Medium Priority

A medium priority issue is something that needs to be addressed soon but won’t cause too much damage if it’s left for a little while. I usually consider this to be two or three months.

An example of what could be a medium priority is boosting your savings. While not having money in a savings account is somewhat of a gamble, it’s not as high of a priority as the first example.

If you spend way more than you make and are hemorrhaging money, there’s only so much a savings account will do.

Future Impact but Not Urgent = Low Priority

A low priority issue is something that needs to be addressed but can wait (I wouldn’t want to push this past the six-month mark).

This is something that you need to start working on but it isn’t going to have a really big negative impact if you postpone for a few months.

An example of a low priority is cutting out excess spending for the sake of getting better control over your money habits.

Even if you’re making more money than you spend a month, if you notice some inefficiencies (you’re eating out every single meal or paying for a gym membership when you get free or cheaper access to the great gym at work) tightening up those areas should be on your list. But, they can wait if needed, so they’re marked as low priority.

3. Group your problem areas by priority

Now that you’ve categorized each of the issues you flagged, it’s time to group them together. Group all your high priorities together, medium priorities together, and low priorities together.

As you’re grouping, see if you can lump any issues together,

For example, if you’ve listed all the areas you overspend in (clothing, groceries, entertainment, etc.) you can simplify. Add the overages together and your problem area will be, “I spend x amount of money more than I make each month.”

The point of this is to make sure the issues you have flagged are as clear and concise as they can be and to make sure you’re staying organized.

4. Brainstorm a list of possible solutions

Brainstorming solutions is exactly what it sounds like. For each issue you flagged (high, medium, or low priority), think up as many fixes as you can.

If you want to time this part, feel free. Or, you could just see how long it takes.

Either way, there are two things you need to watch out for.

First, make sure you aren’t judging your ideas as you brainstorm. If it comes to your head, write it down. Later on you can figure out whether or not it’s a good idea.

Second, don’t create a timeline yet. You don’t need to know all the details at this point. You’re simply brainstorming ideas.

Brainstorming Example

An example brainstorm looks like this:

Issue: I need to boost my emergency fund by $500.


  • Sell some unwanted items on Kijiji
  • Ask my family to give me cash for my birthday and holiday gifts
  • Stop going to the movies and eating out
  • Get a higher paying job
  • Get a second job

You get the point. Just brainstorm. You can type it, write it by hand or draw, but just brainstorm.

5. Pick the best idea and refine it

Now that you’ve brainstormed your head off, it’s time to pick the best idea for each problem area. This might be a good time to take a break and come back with fresh eyes.

How do you pick the best solution?

Crowning one idea as the best is a subjective process. It’s going to heavily depend on the ideas and how well they’ll work for you.

Assigning timelines to your ideas

But, this is where you’ll want to start thinking about the timeline of your solutions. This can help you rank how well an idea will fit into your plan.

Timelines can be hard to gauge appropriately, especially for things you haven’t done before.

So, do your best! If you have decided that you need to pick up a side job, think about what kind of job. Is it an online job that you can do right away? Or is it a job at a local restaurant? The type of job you choose will help you understand the time you need to allot for applying and having your application processed.

What does reaching your personal finance goal require?

If one of your goals is to build a savings of $2,000 by the end of the year, what factors are you relying on? Are you getting a bonus in six months that should make up 2/3s of that amount? Or if you want to reach your goal do you need to start now?

Throughout the process of identifying your solutions you’ve been as critical as possible. And, you shouldn’t slack now.

Here are some other things to consider as you assess your ideas:

  • Challenge your ideas. Are they strategic, measurable, attainable, realistic and timely?
  • Does this make sense for right now? Aim to get the best idea for right now. You can always adjust as you go along.
  • Do any of your solutions solve multiple problems? I find it’s easiest to focus on assessing only one problem and the possible solutions at a time. But, as you go along you may realize that a solution you thought of for another issue can help fix the one you’re thinking about now.

Once you’ve chosen the best solution for each of the gaps, it’s time to refine.

Fine-tune your strategies

If you were super specific in your brainstorming, great! If not, you may need to take a few minutes and refine each of your chosen strategies.

To help set you up for success you’ll want to make sure each strategy has some tactics.

For example, if your strategy is to start a second job within three weeks, your tactics might include:

  • Research a list of 12 jobs within the next two days
  • Apply for all 12 jobs by the end of the week
  • Follow up with applications a week after submission

Once all your strategies have tactics, do a quick tidy up of your work if needed.

6. Tie it all together

Now that you have a strategy and some tactics for each of the issues you flagged in the Personal Money Assessment, it’s time to tie it all together.

This is where you come up with an overarching plan that outlines how and when each solution fits in to the timeline.

Ask yourself these questions

As you’ve completed this exercise maybe how and when you should do everything clicked at some point. If not, here are some helpful ways to help you figure out your step-by-step process.

  • When are you going to start your action plan? Today, tomorrow, next week?
  • How much time will you need to get the ball rolling on each of your strategies? (You’re never going to be done keeping yourself in check. So, for the purpose of the action plan maybe you’ll just want to allot a timeline that gives you time to get everything started and have one or two follow up reviews.)
  • What is the priority level of each item. Does it make sense to do all the high priority items before moving on to medium and low? Or do you have some really quick, easy wins in the medium category you will check off first?
  • Does it make sense to work on multiple priorities at a time? Or should you focus on one then move on? (Be realistic. Consider whether or not your financial situation allows for one at a time priorities. But, also be aware of your availability and whether or not your plan will be too stressful.)

Regardless of how you’ve been tracking your work (Excel, Word, pen and paper) make sure you write your overall process in detail. Don’t miss a solution and explain how and when you’ll do each.

If you have 12 solutions for 12 issues that means you’re going to come up with an overarching plan that integrates all 12 things into your plan.

Make a follow-up plan

Another thing you need to account for in your action plan is following up with yourself. How often will you check in? How will you evaluate your progress? When will you do it? What will you do if you fall behind?

Be specific and come up with a regular routine of following up. If it’s a habitual thing, it’ll be easier to do.

And, figure out what will help you stay accountable. Set an alarm on your phone, tell your friends of your plans, don’t watch T.V. until you do it. Do what works and stick to it.

Now, stick with it and reach your personal finance goals

Holy! That was a lot of information. But, you are now ready to move forward with your action plan. As you stick to your strategies and keep in line with your goal, you will see great results.

If you thought of any other helpful tips and tricks as you completed the Personal Money Assessment or this personal finance action plan, comment below and let us know.

Leave a Reply

Your email address will not be published. Required fields are marked *