The American Forbes website published Jordan Tarver's article in which he talks about how to make financial plans, and the basics of financial planning.

No matter the size or scope of your financial goals, Tarver says, a financial plan can help make those goals a reality.

The writer defines financial planning as the process of looking at the current state of your money and making a step-by-step plan to get to your goals, adding that this may mean making a plan to become debt-free or knowing how to save enough money for a down payment to buy a new home.

This process can include many aspects of personal finance, including investing, paying down debt, building savings, planning for retirement, and even purchasing insurance.

Anyone can engage in financial planning, and it's not just the wealthy.

You can start setting financial goals on your own, and if you so choose, you can work with a financial professional to help devise the smartest plan to make those goals a reality.

5 steps to creating a financial plan

The financial plan is made for smaller goals or tasks that will help support you throughout your financial journey.

Create a financial plan with these five steps:

Determine your financial goals

By setting your financial goals, you will have a clear idea of ​​what you need to achieve these goals.

Your goals should be realistic and achievable, and include a timeline for when you want to achieve them.

Setting a goal to pay off credit card debt by a certain date, for example, would be an appropriate financial goal that will set you up for success.

Determine the budget

Having a clear picture of your finances will make it easier to achieve any financial goals.

A budget can help you understand where your money is going each month, as well as identify where you might be spending too much, giving you opportunities to cut back and allocate that money elsewhere.

One of the easiest budgets to start with is the 50/30/20 budget.

You allocate your monthly income into 3 groups: mandatory spending (50%), savings and debt repayment (20%), and discretionary spending (30%).

This is just one type of many budget plans available.

The budget should be a guide to help you understand your monthly finances, and set smaller goals that will bring you closer to your long-term financial goals.

You probably won't always keep track of your budget in every little detail, and keeping that in mind will help you stay on track, rather than get frustrated and give up on the budget altogether.

There are apps that make budgeting a lot easier by helping you visualize your spending and saving options each month.

Some of these apps give you the option of entering your financial goals directly into their platform to help you stay on track.

The fully featured budgeting app lets you track spending, manage recurring bill payments, set savings goals and manage your monthly cash flow.

Build an emergency fund

Building an emergency fund will help ensure that a financial emergency does not become a catastrophic financial event.

Experts usually recommend 6 months of living expenses to cushion you, should the unexpected occur, such as a job loss.

But 6 months' worth of money may be out of reach for those who may struggle financially, or those who live in tight financial circumstances each month.

You can start building an emergency fund by setting aside a few dollars from each paycheck.

You can start with a small funding goal of $100 to $200 to start your fund.

From there, you can create other smaller goals that will increase the amount of cash available to you with this fund.

Some budgeting and savings apps also give you the option of rounding to the nearest dollar in transactions and directing a transfer that spares you the change toward your savings.

 reduce debt

Having to make debt payments every month means you'll have less money to set aside for your purchasing goals.

In addition to carrying on credit card debt can be costly, each month, interest accrues increasing on your balance, making repayments take longer.

There are a variety of debt repayment methods.

Two of the most common methods are the debt snowball method and the debt breakdown method.

With the snowball method, you'll pay off your smaller debts first, then work your way up to the debt with higher balances.

On the other hand, the debt avalanche begins with rising debt rates first.

Invest for the future

Although investing is risky, it can help your money grow, even if you are not wealthy.

Keep in mind that investing always involves some risk, you may end up losing the money you invest.

There are also automated advisors that automatically recommend investments based on your goals and risk tolerance.

In general, a financial plan consists of a series of small goals that will help you achieve a larger financial goal, such as buying a home or retiring comfortably.

A solid financial plan includes setting your goals, creating a budget, building an emergency fund, paying off high-interest debt and investing.