Skip to content

Lifestyle Financial Planning: How to Build Your DIY Plan

Lifestyle Financial Planning How to build your own plan
Spread the love

Do you ever daydream about travel adventures, reigniting a passion project, or achieving financial freedom to live life on your terms? Maybe those dreams feel out of reach like they require a magic bank account that just doesn’t exist. Well, guess what? Lifestyle financial planning is a powerful tool that can help you bridge the gap between your aspirations and reality.

It’s more than just saving and budgeting. Lifestyle financial planning takes a holistic approach, considering your values, goals, and dreams to create a personalised roadmap to your ideal future. We will help you to take charge and craft your own DIY lifestyle financial plan.

This article will guide you through defining your dream life, assessing your current financial situation, setting achievable goals, and crafting a personalised plan to bring your vision to life. 

Ready to turn your dreams into reality? Let’s dive in!

What is lifestyle financial planning?

Traditionally, financial planning has often focused on accumulating wealth and saving for retirement. While these are important goals, lifestyle financial planning takes a more comprehensive approach. It goes beyond just the numbers to consider your unique values, aspirations, and what truly fulfils you in life. Instead of asking yourself “What can I afford?”, you want to ask “What can I do to make my dreams a reality?”

Here’s what sets lifestyle financial planning apart:

  • Focus on your dreams: It starts by helping you define your ideal future. What kind of lifestyle do you want to have? What experiences are important to you?
  • Holistic approach: It takes a big-picture view, encompassing your financial situation, career goals, and personal aspirations.
  • Personalised roadmap: It creates a customised plan that outlines achievable steps to bridge the gap between your current reality and your dream life.
  • Flexibility for change: Life is full of surprises, and your financial plan should be too. Lifestyle financial planning allows for adjustments as your goals and circumstances evolve.

In essence, lifestyle financial planning empowers you to design a financial future that supports the life you desire, not just endlessly saving and building wealth without a clear purpose. It’s about taking control of your money and making it work for YOU.

Do I need a financial professional for lifestyle financial planning?

No, not necessarily. That being said, financial professionals like financial advisors or financial coaches can still be a valuable resource. If your financial situation is particularly complex, you lack confidence navigating your finances or need specific information or personalised investment advice, professional help can be a great asset. 

However, if you’re generally comfortable managing your money and are eager to learn, you can get started without a professional. This guide equips you to take charge of your financial planning. You can always consider seeking professional guidance down the line as your needs evolve. W, the most important step is to take action and start building the financial future you desire.

5 steps to building your dream lifestyle financial plan

1. Define your dream lifestyle

Many people think financial planning starts with budgeting for what they can “afford” right now. But lifestyle financial planning flips the script. Here, we start with dreams and life goals! This is about unleashing your wildest desires and crafting a blueprint for your ideal future, a future where money isn’t a barrier to your happiness.

To get started, imagine a life where money isn’t a concern. Here are some prompts to get you thinking:

  • Work & balance: Do you dream of achieving financial freedom and early retirement? Perhaps starting your own successful business and being your own boss is most important to you. Or perhaps you dream of a career change to a more fulfilling field that allows you to contribute to a cause you’re passionate about. How much free time would you ideally have to pursue your passions and connect with the important people in your life?
  • Hobbies & fulfilment: Do you crave the joy of mastering an old hobby like playing an instrument, or the satisfaction of creating beautiful pieces for your home through pottery classes? Perhaps you yearn to capture life’s special moments through a photography course. What activities would bring you the most fulfilment?
  • Travel & exploration: Do you dream of extended trips abroad, finally learning a new outdoor skill like surfing, or embarking on road trip adventures with loved ones? How often would you ideally travel in a year?
  • Contribution & legacy: Imagine the kind of impact you want to make on the world. Do you dream of leaving a positive legacy, perhaps by supporting environmental causes or starting a social enterprise?
  • Living: Would your ideal living space be a vibrant city apartment buzzing with life, a charming suburban house perfect for family gatherings, or a cosy mountain cabin for weekend escapes? Where would you want to live and what features would truly enhance your comfort and enjoyment?

This exercise isn’t about practicality – it’s about sparking inspiration and aligning your financial future with what truly matters. We’ll bridge the gap between dreams and reality later. But for now, let your imagination soar.

2. Assess your current financial situation

Now that you’ve envisioned your dream lifestyle, let’s get a clear picture of your current financial footing. This will be the foundation for crafting a plan that bridges the gap between your dreams and reality.  Don’t worry, this isn’t about judgment – it’s about empowering yourself with knowledge.

Here’s a roadmap to navigate your financial landscape:

Track your income and expenses:

  • Gather your financial statements: This includes bank statements, credit card statements, pay stubs, and any investment account statements you may have.
  • Choose a tracking method: There are many budgeting apps and tools available, or you can create a simple spreadsheet.
  • Track income: List all your income sources – salary, side hustles, rental income, etc. Be sure to factor in any recurring income you receive.
  • Track expenses: Categorise your expenses – housing, food, transportation, entertainment, debt payments, etc. Track both essential and non-essential spending for a clear picture.

Calculate your net worth:

  • Net worth is a simple but powerful metric that helps you understand your overall financial health. It’s calculated by subtracting your total liabilities (debts) from your total assets (everything you own).
  • Here’s the formula: Net Worth = Assets – Liabilities
  • Assets: List everything you own that has value – cash, savings accounts, investments, retirement accounts, equity in your house, etc. 
  • Liabilities: List all your debts – credit card balances, student loans, mortgages, car loans, etc. Include the total amount owed on each debt.

By tracking your income and expenses, you gain awareness of your cash flow. Calculating your net worth provides a snapshot of your overall financial position. This information is crucial for creating a realistic financial plan that aligns with your dream lifestyle.

Don’t be discouraged if the numbers don’t match your dreams just yet. The important thing is to be honest and aware of your current situation. In the following sections, we’ll use this information to develop a plan for reaching your financial goals.

3. Set financial goals

With your dream lifestyle firmly in mind and your current financial situation laid bare, it’s time to build the bridge that connects them: financial goals. These goals act as stepping stones, guiding you on a clear path towards your ideal future. They should not just be about reaching a certain number but should reflect the financial decisions you’ll need to make to achieve your desired lifestyle.

The SMART goal framework ensures your goals are actionable and achievable. Let’s look at how this framework helps you craft powerful financial goals:

  • Specific: Clearly define what you want to achieve.
  • Measurable: Track your progress! Set milestones and deadlines to stay motivated. In the previous example, measurable would involve tracking your monthly savings and celebrating reaching the 20% mark at the 6-month mark.
  • Achievable: Be ambitious, but also consider your current financial situation and resources. While I encourage you to push boundaries, achieving your goals shouldn’t feel hopelessly impossible. Therefore, set a stretch goal that feels challenging yet attainable. 
  • Relevant: Align your goals with your dream lifestyle. For example, saving for a new car won’t help you travel the world if that’s your true desire.
  • Time-bound: Set a specific timeframe for achieving each goal. This creates a sense of urgency and keeps you focused.

Additional tip: When setting your goals, do some research to get a general idea of the costs associated with them. If one of your goals is a large purchase like a house, break it down into smaller components (deposit, legal fees, potential renovations) and research each one. For long-term plans, it’s also worth factoring in inflation when estimating future costs.

SMART financial goal examples

Now that you understand the SMART framework, let’s look at some SMART goal examples with a touch of ambition:

Dream: Become a digital nomad, travelling and working remotely.

SMART goal: “Double monthly savings to £1,500 within the next 6 months, reaching a total of £9,000 for initial travel and living expenses. Simultaneously, research and secure 2-3 high-paying remote freelance gigs within the next 6 months to sustain a location-independent income.” This measurable action directly contributes to the dream of becoming a digital nomad by building a financial cushion and securing income streams.

Dream: Take a family of four on a year-long adventure around the world, experiencing different cultures and creating lasting memories.

SMART goal: “Save an additional £5,000 per month towards a travel fund for the next 36 months, reaching a total of £180,000.” This ambitious goal requires significant lifestyle adjustments and potentially increased income but brings the dream world trip within reach.

Remember, financial goals are a living document. They can evolve as your circumstances or dreams change. The key is to have a clear direction so you can start taking consistent action towards achieving them.

4. Build your financial action plan

Now that you’ve envisioned your dream lifestyle and set SMART goals to achieve it, let’s get down to brass tacks and build your personalised financial action plan. This plan will be your roadmap to financial success, transforming your dreams into tangible realities. Here are the key pillars of your action plan:

Craft a budget:

  • Track your income and expenses: We explored this in Section 2. Having a clear understanding of your cash flow is essential for crafting a realistic budget.
  • Prioritise your spending: Align your budget with your SMART goals. This means allocating more funds towards your dream lifestyle categories, whether it’s travel savings, early retirement contributions, or starting a business venture. This might mean you need to make some sacrifices from some other areas of life.
  • Embrace frugality (without sacrificing fun!): Find areas to cut unnecessary expenses without feeling deprived. Explore cheaper grocery alternatives, negotiate bills, or consider downsizing if appropriate. There are many ways to be smart with your money while still enjoying life.
  • Automate your finances: Set up automatic transfers to savings and bill payments. This ensures you stay on track and eliminates the temptation to overspend.

Conquer debt:

If you have high-interest debt, i.e. bad debt, it’s time to start tackling it. Here’s where to start:

  • List your debts: Gather information on all your debts, including interest rates, minimum payments, and total balances.
  • Prioritise your debt payments: Develop a strategy to tackle your debts. The avalanche method prioritises paying off debts with the highest interest rates first, while the snowball method focuses on paying off the smallest debts first for a quicker sense of accomplishment. Choose the method that best motivates you.
  • Explore debt consolidation: Consider consolidating high-interest debts into a lower-interest loan to simplify payments and potentially save money.

Build wealth for the future:

  • Increase your income: Let’s be real, ambitious financial goals often require increasing your income alongside smart saving and investing. After all, there’s only so much you can save from your current income. Negotiating a raise, starting a side hustle, or exploring freelance opportunities are all strategies to consider. Remember, increased income can significantly accelerate your progress towards your dreams.
  • Pay yourself first: Treat savings and investments like a bill. Set up automatic transfers to your savings account to consistently build your financial reserves.
  • Start investing early: The power of compound interest is real! Even small amounts invested early can grow significantly over time. However, investing typically has a longer time horizon (usually 5+ years). Focus on building a secure savings foundation for short and mid-term goals before diving into investments.

Related: Investing for Beginners: How to get started

5. Take action and make adjustments

The blueprint is complete, but a financial action plan only gathers dust if left on the shelf. Now is the time to translate your plans into action!

  • Start today: Don’t wait for the “perfect” time. Begin implementing your strategies, even if it’s with small steps. Every action, no matter how seemingly insignificant, moves you closer to your goals.
  • Review regularly: Your financial situation and goals are not static. Schedule regular reviews (quarterly or annually) to assess your progress. Have you reached your milestones? Have your circumstances or dreams changed? Adapt your plan accordingly to stay on track.
  • Celebrate milestones: Reaching a savings goal, paying off a debt, or securing a raise are all victories to be celebrated! Acknowledge your accomplishments to stay motivated and maintain momentum.
  • Stay flexible: Life throws curveballs. Unexpected expenses or changes in income may require adjustments to your plan. Don’t be discouraged – be adaptable. Review your budget and spending habits, and explore ways to get back on course.


Congratulations! By following the principles of DIY lifestyle financial planning, you’ve taken control of your financial future. You’ve crafted a personalised roadmap guiding you towards the dream life you envision.

Remember, the key takeaways are:

  • Align your finances with your values and aspirations. It’s not just about the numbers – it’s about building a life you love.
  • Set SMART goals and create an actionable plan. Specificity and a clear path are essential for achieving your dreams.
  • Embrace consistent action and regular adjustments. Financial planning is a journey, not a destination. Be prepared to adapt as needed.

Taking control of your finances is empowering. You now have the tools and knowledge to build the life you desire, brick by brick. There may be challenges along the way, but with dedication and perseverance, you can turn your dreams into reality.

For additional guidance: While this guide equips you with the essentials of DIY lifestyle financial planning, there may be times when seeking professional advice is beneficial. Consider consulting a certified financial planner, tax professionals or other advisory services for complex financial situations or personalised strategies.

Spread the love

Leave a Reply

Your email address will not be published. Required fields are marked *

Exit mobile version