What Is a Financial Strategy? | Importance, Types, and Steps (2024)

A financial strategy is a clear path for what you are trying to achieve with your money. It can range from short-term goals like saving up enough for a new computer in the next three years, to lifetime goals like how much you would need to save up in order to retire at 65.

It is also important to have a financial strategy because it can help you stay organized and make better financial decisions.

Have questions creating a financial strategy? Click here.

Why Do You Need One?

A financial strategy is beneficial because it will help you save more money in the long run.

Having a plan for your money can also help you stay organized, instead of spending frivolously with no end goal in mind.

When things are disorganized, it's easy to make poor financial decisions -- but when you have a plan in place, you are less likely to buy that shiny new phone just because it's the latest gadget.

The Five Main Types of Financial Strategies

  • Retirement Strategy - A plan for how you will save up for retirement and sustain yourself once retired.
  • Investment Strategy - A financial strategy to help you grow your investments quickly, rather than putting your money into a savings account where it won't increase much in value over time.
  • Debt Reduction Strategy - A plan to pay off your high-interest debt, like credit cards and loans, quickly so that you can save more of your money in interest payments.
  • Emergency Fund/Savings Strategy - A plan for how much you need to set aside monthly in order to have enough money for emergencies, like car repairs or medical bills.
  • Financial Security Strategy - A plan that will ensure you are financially secure if something were to happen to you or your family, like life insurance or long-term care insurance.

How to Create Your Own Personal Financial Strategy

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Step 1. Decide what you want your money to do for you.

This means rather than spending money on things that will only add to your stress, like eating out all the time or buying clothes you never wear.

You need to prioritize what is important in your life and spend money on those items rather than constantly spending it on more materialistic items that won't actually make you happy in the long run.

Step 2. Track your spending.

Once you have decided what your priorities are, then you can start to save more because you will be able to see where all of your money is going.

This way, you can identify if there are areas where you could save more money.

Step 3. Organize your expenses into categories.

This will help make it easier to see how much you are spending on each category, like rent, groceries, and transportation.

Step 4. Make a budget and stick to it.

Creating a budget is one of the most important aspects of having a financial strategy.

It will help you make sure that you are not overspending in any one category and that you are saving up for things that are important to you.

Step 5. Set goals for yourself.

Make sure your goals are realistic, if they aren't, it will be less likely that you stick to them.

Start with small steps toward reaching a larger goal and make sure to reward yourself when you reach smaller milestones along the way.

Step 6. Talk to a financial advisor.

If you are still struggling with creating a financial strategy that works for you, then talking to a financial advisor can be extremely helpful.

They will be able to look at your specific situation and create a plan tailored just for you.

The Benefits Of Having A Financial Strategy In Place

  • It's easier to save money when you have a financial strategy in place because it gives you a clear path to follow.
  • It's easier to make better financial decisions when you have a plan in place, because it can help keep track of your goals and how much progress you are making towards completing them.
  • When things are organized, it's easy to see what you can cut back on in order to save more money.
  • Having a financial strategy will help you be more prepared for emergencies, which can help minimize the amount of money you have to spend on unexpected costs.
  • A financial strategy can help give you peace of mind, knowing that you and your loved ones are financially secure in the event of an emergency.

Resources For Creating Your Own Personal Financial Strategy

Here are some suggestions that could start you off with your own financial strategy:

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The 50/30/20 Rule

A budgeting guideline suggests you spend 50% of your income on necessities, 30% of your income on discretionary spending, and 20% of your income on savings or debt payments.

Dave Ramsey's Financial Peace University

A nine-week course that helps participants create a budget and plan for their financial future.

The Get Rich Slowly Guide to Personal Finance

A comprehensive guide to personal finance, covering topics like budgeting, investing and reducing debt.


A free online tool that helps you create a budget, track your expenses and see your bank account balances at a glance.

Personal Capital

A free online tool that helps you track your budget, plan for retirement and see your financial goals within minutes.

The Future of Money

There are many benefits to having a financial strategy in place, so it's worthwhile to create one for yourself.

Even just spending 20 minutes on your finances every month can help you meet your goals and keep yourself financially accountable.

Having a plan in place will also make it easier to save money, pay off debts, and reach other personal financial goals. After all, what is life without proper planning?

The Bottom Line

Creating a financial strategy is beneficial to your personal finances, because it keeps you on track, helps you save more money, and makes reaching your goals easier.

The first step toward creating any strategy is to set attainable goals for yourself.

Then organize all of your expenses into categories so you can see where more of your money is going or what changes you can make to save.

Finally, talk with a financial advisor if you are having trouble creating your plan or if you just need some extra help getting started.

After all, it's better to be prepared than left in the dark!

Financial Strategy FAQs

A financial strategy is a plan that helps you organize and achieve your personal financial goals.

Some benefits of having a financial strategy are that it makes saving money easier, helps you make better financial decisions and prepares you for emergencies.

There are many different ways to create a personal financial strategy. One way is to use one of the many online resources that are available, like Mint or Personal Capital. Another way is to attend a financial planning class like Dave Ramsey's Financial Peace University.

No, absolutely not. Many personal financial strategies can be created without the help of a professional. However, it may be helpful to talk to a trusted family member or friend if you are looking for suggestions on how to get started.

Creating your own strategy will vary depending on how many goals you have and how much information you need to organize. However, it shouldn't take more than 20 minutes each month to stay on track.

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About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

I'm True Tamplin, a Certified Educator in Personal Finance (CEPF®), published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. My expertise lies in personal finance, and I have a strong background in creating and implementing effective financial strategies. I've spoken to various financial communities, including the CFA Institute, and contributed to financial education through my site, Finance Strategists.

Now, let's delve into the concepts presented in the article about financial strategy:

  1. Financial Strategy Overview:

    • A financial strategy is a plan guiding how to achieve financial goals.
    • It ranges from short-term objectives like saving for a new computer to lifelong goals such as retirement planning.
  2. Importance of Financial Strategy:

    • It helps in staying organized and making better financial decisions.
    • A well-defined plan encourages saving money over the long run.
  3. Five Main Types of Financial Strategies:

    • Retirement Strategy: Planning for retirement and sustaining oneself post-retirement.
    • Investment Strategy: Focusing on growing investments quickly rather than placing money in low-yield savings accounts.
    • Debt Reduction Strategy: Paying off high-interest debts quickly to save on interest payments.
    • Emergency Fund/Savings Strategy: Planning for monthly savings to cover unexpected expenses.
    • Financial Security Strategy: Ensuring financial security through measures like life insurance.
  4. Steps to Create Your Personal Financial Strategy:

    • Step 1: Prioritize spending based on important life aspects.
    • Step 2: Track spending to identify areas for potential savings.
    • Step 3: Organize expenses into categories for better visibility.
    • Step 4: Create and adhere to a budget to avoid overspending.
    • Step 5: Set realistic goals, reward yourself for milestones, and take small steps.
    • Step 6: Consider consulting a financial advisor for personalized guidance.
  5. Benefits of Having a Financial Strategy:

    • Easier to save money with a clear path.
    • Facilitates better financial decision-making.
    • Enables identification of areas for cost-cutting.
    • Prepares for emergencies, reducing unexpected expenses.
    • Provides peace of mind, ensuring financial security.
  6. Resources for Creating Your Own Financial Strategy:

    • The 50/30/20 Rule, Dave Ramsey's Financial Peace University, Get Rich Slowly Guide, Mint, and Personal Capital are suggested resources.
  7. The Future of Money:

    • Emphasizes the benefits of having a financial strategy and spending time on finances regularly.
  8. The Bottom Line:

    • Creating a financial strategy is essential for staying on track, saving more, and reaching financial goals.
    • Setting attainable goals, organizing expenses, and seeking professional advice are key components.
  9. Financial Strategy FAQs:

    • Defines a financial strategy and highlights its benefits.
    • Suggests various ways to create a personal financial strategy, including online resources and financial planning classes.
    • Acknowledges that professional help is not mandatory but can be beneficial.
    • Estimates that creating and maintaining a personal financial strategy shouldn't take more than 20 minutes each month.
  10. About the Author - True Tamplin:

    • Provides a brief background on True Tamplin, emphasizing his qualifications, publications, and speaking engagements in the field of personal finance.

In conclusion, the article offers a comprehensive guide to creating and implementing a personal financial strategy, covering various aspects from goal-setting to resource recommendations.

What Is a Financial Strategy? | Importance, Types, and Steps (2024)
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