Aligning Personal Interests with Financial Objectives: A Five-Step Guide to Effective Wealth Planning

Paul FennerPersonal Finance

Life planning images - Personal Financial Statement, TAMMA Capital

Does this sound like you, “We don’t have any money at the end of the month.  We’re not saving enough or investing anything for retirement, and we will send our daughter to college next year.”

Your money follows your personal interests.  What you spend your money on shows what is important to you.  So, if you change what is important, your spending will change with it.  But how do you begin to make the changes you want?

Wealth planning is a tool for creating awareness of what you want in your personal and financial life.  Wealth planning should not be considered a weapon to punish yourself for spending money.  Instead, it is a process to become acutely aware of how we spend our money so we have enough for the things that matter most.

Here are five steps that you can take to begin making the changes you want in your personal and financial life;

  1. Identify the personal and financial goals that you want to achieve
  2. Develop your personal financial statements
  3. Understand where your spending is going
  4. Identify the gaps between your goals and where your money is going
  5. Isolate the action items that you can take to bridge your gap

Now let’s break these steps into actionable items that you can accomplish.

Identify the personal and financial goals that you want to achieve

The most important part of your wealth planning journey starts at the beginning: deciding what is important to you.  This is best achieved by carving out time to be alone and truly think about what you want to do.

  • Identify three to four objectives/goals that are the most important to you
  • Objectives/goals are both personal and financial
  • What type of lifestyle do you want Today & in the Future?
  • Have written down a clear and precise reminder of why you are doing them

Develop your personal financial statements

Just like a company or business has a set of financial statements, every individual and family has their own.

Income Statement/Spending Plan

Your income statement is essentially your spending plan.  You have money coming in from what you earn and money going out from what you spend/buy.

I often tell people that the checkbook doesn’t lie.  Where you spend your money will show you what is important to you.  Change what is important to you, and the money will follow.  Again, developing a spending plan shouldn’t be used as a weapon to punish yourself.  It should help determine what you are spending your money on and how to make changes.

I have created an online client portal for my clients to sync their financial accounts, such as checking, savings, credit cards, and loan balances, to determine where their money is going.  You can’t begin to make financial changes until you have a detailed understanding of your spending. is a similar tool that you can utilize, as well as your monthly financial statements from your bank and credit card providers.  Additionally, I have built an Excel tool you can access here for free to help get you started.

Balance Sheet/Net Worth Statement

Your net worth statement lists all your financial assets, such as a house, cars, bank accounts, and retirement plans (401(k), IRAs, etc.).  Additionally, you list all your debts or liabilities, such as your mortgage, student loan debt, car loans, and credit card debt.

When you subtract your assets from your liabilities, you arrive at your Net Worth.

You can increase your net worth in a few different ways;

  1. Increase the amount of your assets by saving and investing
  2. Decrease the amount of liabilities by paying down debt
  3. A combination of the two

The most successful wealth management plans involve savings, investing, and paying down debt to increase your net worth. 

Identify the gaps between your goals and where your money is going

Now that you have identified your personal/financial goals and have built your personal financial statements, you can begin to pinpoint what gaps you may have in your wealth management plan.

You can only identify your gaps when you have identified your objectives and developed your personal financial statements.  I cannot stress this enough.

A gap exists if you have a shortfall between your actual and desired outcome, such as the following;

  • I want to save 10% in my 401(k) but am only saving 6%
  • Each month I see that my credit card balance has grown
  • My savings balance is going down, not up

Isolate the action items that you can take to bridge your gap

Once you have identified your gaps, you can put together action items to bridge your gap. 

For example, you may find through your spending plan that a large portion of your variable costs goes to eating out.  Determine how you could scale this expense back, identify the savings it would create, and then how you would re-allocate the savings to one of your personal/financial goals.

Here are a few other ideas that may help in this process;

  • Review your mortgage statement to determine if refinancing to a lower rate would be beneficial
  • If you currently rent, can you negotiate a lower rent for your apartment
  • Delay or downsize an upcoming vacation

Paying attention to the “big stuff” might help you reach your objectives faster.  Major life purchases will have a far bigger impact on your wealth than saving some money at Starbucks:

  • Buying a house
  • Buying a car
  • Choosing where to live
  • Choosing where and what to do on vacation(s)


Throughout the wealth planning journey, I have found three foundational elements to keep top of mind;

  1. Wealth planning is an ongoing process
  2. Goals can and will take a back seat to priorities
  3. You cannot prepare for everything, and that is okay

You will likely find that you can do most things in life, but you can’t do them all.