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Individual financial planning is the process of putting together a “living” schematic organizing your personal finances to help you secure a solid financial future.

Why living? It will change as your finances change. Here’s what you should include in your financial plan:

A personal budget sheet

A budget sheet lists income against expenses and debts to help you see where your money is going.

Once you know where your money is going, you can make adjustments to your spending to increase monthly savings, which you can then allocate toward savings, investments, and debt payments.

Pro tip! Here’s a personal budget sheet sample to help you get started, but this article covers a variety of free spreadsheets with varying functions.

Pay off high-interest debt quickly

It’s much easier to pool money into savings and investments once you have your high-interest debt out of the way. On your personal budget sheet, make a special note about your debts. Include how much overall debt you have and what debts have the highest interest rates and fees.

To help you determine how much you should put toward your debts each month to pay them off quickly, use this debt-payoff calculator.

Two popular debt-payment strategies are the avalanche method and the snowball method. The former involves paying off the highest-interest debts first to help you save on interest. The latter involves paying off the smallest debts first to help you stay motivated as you move on to bigger debts.

If you can’t alleviate your high-interest debt quickly, you may want to consider hiring a debt consolidation specialist.

An emergency fund

This is an often-overlooked, yet critical, part of the personal financial plan. Sometimes, life hammers you with expensive, unwelcome surprises, such as an emergency surgery or car repairs.

Having an emergency fund tucked away in savings will help mitigate the financial damage these expenses cause, and it doesn’t take much money to get one started.

Even adding $100 per month to an initial deposit of $1,000 at a 2.35 percent APR will build to over $7,000 after income tax in just five years—that’ll pay for seven root canals.

An investment portfolio

Consider creating a diversified investment portfolio of mutual funds, stocks, bonds, and other types of investments, such as real estate investment trusts and cryptocurrencies.

You want to keep your investment portfolio as diversified as possible to mitigate market risk. By spreading out your investments, you won’t lose as much money if and when one of your investments tanks in value.

But let’s not get too far ahead of ourselves. You can start an investment portfolio with something as simple as a mutual fund.

The right insurance plan

Often, the final missing piece in a financial plan is the right mix of insurance policies.

Auto insurance is a given, because it is required in most states. But beyond that, consider health insurance to protect you in times of illness and life insurance to provide for your loved ones after you pass on.

You may also want to consider disability insurance in case an accident prevents you from working. Furthermore, homeowners insurance can help you rebuild your home after a catastrophe.

The bottom line

Now that you know what you should include in your financial plan, you’re all set to start!

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