Financial Independence

How To Build A Financial Plan: how can DIYMoney help?

Creating your own financial plan is fairly easy and accessible. The internet offers budgeting spreadsheets, investment calculators, and trading platforms. Everything you need to plan your future and build a financially independent lifestyle is literally at your fingertips. 

So why do we still struggle to build a sensible Financial Plan?

The web can provide you with the tools you need, but you might need some help putting it all together. A Financial Planner can usually offer a valuable objective opinion, and might have an insight that you hadn’t considered. 

But Financial Advice isn’t for everyone. Some people just find it hard to open up about money in a face-to-face setting, especially with a stranger. Research shows there is a genuine fear of being judged; which makes people reluctant to ask for help. 

Other people don’t think they’d get value for the fees they pay for advice, certainly at the beginning of their financial journey. Financial Advice can be expensive, and many of its benefits can seem intangible before you experience it first hand. 

That’s why we’ve built DIYMoney. 

While not everyone needs a financial planner, everyone should have a financial plan. Below, we look at the main aspects of your financial plan, outline the parts you can do yourself, and point out where DIYMoney might help you arrive at the right decision for yourself and your family. 

Goal Setting

The first step towards creating your financial plan is to understand what you would like to achieve. This may be a first step on the property ladder, a comfortable retirement, or anything else in between. 

To make your goal more concrete, you should:

  • Set a target date and amount.
  • Write it down.
  • Revisit it regularly. Are you on track? Is your goal still the same or have your priorities changed? Do you have any new goals you want to add?

Once you have your goals in mind, you can build your financial decisions around them. 

DIYMoney can help you:

  • to set meaningful goals, using our WWW rules
  • dial up the brightness of the goals you set, so they become more tangible
  • give you some tips and tricks to help you prioritise your planning

Budgeting and Cash Management

To achieve your goals, you need to get your money working efficiently. To get started:

Keep your spending under control, and ensure you have a purpose for any surplus income, whether this is reducing debt or investing towards your goals. We have built the DIYMoney Calculators to help you model your financial future, taking into account risk, your investing horizon, and the monetary amounts.

  • Build up an emergency fund of between 3 and 6 months’ expenditure.
  • Avoid holding more than £85,000 with any one banking group to benefit from maximum protection if the bank fails. 

DIYMoney can help you:

  • build and maintain a budget so you can commit to a savings rate to fund your financial future
  • discover rules of thumb like the 50/30/20 rule to make this easier
  • understand the tactics you need to stay on track with your budgeting

Debt Reduction

Expensive debt can derail a financial plan, but there are times when credit can be useful. To manage debt successfully:

  • Shop around for the best mortgage deal.
  • Weigh up the benefits of overpaying your mortgage versus investing.
  • Use a credit card to benefit from buyer protection, but pay off the balance as soon as possible. 
  • Avoid payday loans or other expensive borrowing. 

DIYMoney can help:

  • if you’re unsure whether to invest or clear debt
  • we outline the two most powerful debt-reduction strategies
  • we help you put your debt in the context of your overall financial plan


Everyone of working age should have insurance, particularly if they have a family. The main types are:

  • Life cover, which pays out a lump sum on death.
  • Critical illness, which pays out if you are diagnosed with a serious medical condition.
  • Income protection, to replace your salary if you are unable to work long-term.

You may have some cover through your employer, but is it likely to be enough? Taking into account lost earnings and pension contributions, could you (or your dependants) still live a comfortable lifestyle if the worst happened?   

DIYMoney can help:

  • decide how much cover is appropriate for your circumstances
  • how the cover should be structured between Life Cover and Illness Cover versus Income Protection
  • how your emergency funds and pension plans interact with your protection requirements


Investing for the first time can be daunting, but there is an investment option out there for everyone. To get started:

  • Use your Stocks and Shares ISA allowance. You can invest up to £20,000 per year and the returns are free of tax. 
  • Take an appropriate amount of risk based on your goals, personal attitude, and the amount you could afford to lose. 
  • Ensure your investments are well-diversified.

Generally index-trackers or multi-asset funds are good choices for novice investors, as they limit the amount of active involvement required. Asset allocation and selection is taken care of behind the scenes, so all you need to do is choose the right fund.

DIYMoney can help:

  • understand how your investment strategy should reflect your risk profile
  • how investing is the engine which funds your financial future
  • understand how funds work, and why they’re the right approach for most investors


Pensions are highly tax-efficient and offer a great way of saving for retirement. To gain the benefits:

  • Make sure you join your workplace pension if you have one available. Not only will you receive tax relief on your own payments, but your employer will also contribute.
  • You can also make higher contributions, or even set up your own personal pension if you would like to target a larger retirement fund.
  • Ensure your fund is invested mainly in equities, particularly if you are more than ten years from retirement. 
  • Increase your contributions every year. 

DIYMoney can help:

  • understand the role of pensions in a well-designed Financial Plan
  • understand how pensions work, why they work like that, and how to use them most effectively
  • work out whether it’s best to consolidate your plans into one, or whether to leave them untouched
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Richard Martin-Redman