Get Financially Fit

How to build a financial planning roadmap

Oct 16, 2023

Are you ready to embark on a journey towards financial success and freedom? Loqbox has got just the tool for you: a financial planning roadmap. Like a treasure map, but where ‘X’ marks the spot on improving your financial wellbeing. So buckle up as we guide you through steps to building your very own roadmap to financial freedom.

Financial roadmap example

It’s important to focus on a personal financial roadmap that’s designed for your individual circumstances, needs and goals. What’s right for you won’t necessarily be right for somebody else, so you need to build a financial roadmap that’s bespoke to your journey. You can achieve this by creating an objective-based financial plan.

Step 1: Set your destination (define your goals)

Just like planning any journey, you need to know where you're going. What are your financial goals? Whether it's buying a house, paying off student loans, or retiring comfortably, pinpoint your destination and create clear, realistic goals. Goals can be thought of as short, medium, or long-term. 

Short-term goals include saving for things like an emergency fund. Medium-term could be saving for a deposit on a house. Whereas long-term objectives might be a retirement plan. What’s right for you will depend on your age and your circumstances. 

Setting goals helps you stay motivated and gives you a foundation to plot your roadmap to financial success.

You might want to clear debts, save for a house, and also plan for retirement. If you have more than one goal, prioritise your objectives so you don’t get overwhelmed. Clearing debt can boost your saving power, so it makes sense to tackle high-interest borrowing first. Lay out your goals and think about them in relation to your current financial situation.

Step 2: Set your start point (assess your current situation)

Now you’ve identified the destination for your financial roadmap, it’s important to take stock of where you’re setting off from. You can’t work out the best route you should take if you’re only looking at the end point. 

Just like your GPS checks your current location when setting routes, so should you when it comes to planning your financial roadmap.

Calculate your net worth: assess your income, expenditure, and any savings that you already have. What does this look like? Do your outgoings outweigh your income? Do you already have some healthy savings pots? Could you be making your income work harder towards your goals? This snapshot provides the foundation for your roadmap.

Step 3: Set your route (create a budget)

Think of your budget as your fuel and supplies as you plan your roadmap to financial freedom. By outlining your essential and non-essential outgoings, and comparing those to your income, the fundamentals of your journey become clear. 

Think of your income as your fuel and your outgoings as the efficiency of your engine. Your budget lets you know how far you can travel every month. 

There’s more than one way to build a budget. You can read more about different budgeting rules here, to find one that best suits your needs. The 50/20/30 rule breaks your income into percentage chunks: 50% for essential outgoings and 30% for non-essential outgoings. 

That leaves 20% for your goals think of this as your potential mileage. 

Step 4: Chart some stops (set milestones)

It can take patience to reach the end of your personal financial roadmap. So give yourself milestones to celebrate along the way, for example paying off a credit card, reaching a certain savings amount, or investing in your first stocks. 

Think of these as rest stops, giving you the opportunity to take stock of how far you’ve come and rejuvenate your motivation to keep on going.

Step 5: Shed the dead weight, clear your debts

If you have any debts to pay off along the way, make a plan to tackle them. The interest that you pay on your debts will most likely far outweigh the interest that you earn on your savings. So it makes sense to boost your saving power before you start towards your destination. 

It’s a good idea to prioritise high-interest debts while making minimum payments on others. 

Some debts, like mortgages, don’t need to be paid off before you set off on your journey. But remember, with each debt crossed off your list, the faster you'll be able to move towards your financial goals.

Step 6: Avoid potholes (build an emergency fund)

Life's full of surprises. An emergency fund acts like financial shock absorbers on what can be a rocky road to success. Aim for three to six months' worth of your living expenses. Not only does this give you support and stability, but it also gives you peace of mind. This can help you to stay motivated and feel like you’re on top of your plans. If you’ve always struggled with building a savings habit, a tool like Loqbox Save may be a good idea — which is particularly helpful when you set up the payment date just after your ‘payday’.

Step 7: Reroute when needed (review and adjust your plans)

Keep an eye on your financial roadmap to make sure it still makes sense. Circumstances might change, and you may find you are able to put more towards your goals. Or perhaps your new situation means that you can no longer maintain your original plan. That doesn’t have to mean that it’s the end of your journey. It just means you may need a new route.

Budgets that work on percentages naturally adjust to your circumstances. But if you’re finding 20% too much and need to decrease it, or if you can increase your contributions instead, then do it. 

These roadmaps have to be right for your individual situation. So don’t be afraid to make changes. The most important thing is that you keep it realistic and you stick with it.

Step 8: Take a road trip buddy (get help and advice)

If you’re feeling lost or overwhelmed, reach out to others who’ve made similar journeys, or, if you need to, get professional advice and support. 

Get a free personalised financial plan when you get started with a Loqbox membership. Use it to fine-tune your roadmap, optimise your investments, and keep yourself accountable. Remember — you are not alone!

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