Financial planning is a big concept that includes things like budgeting, retirement planning, saving, insurance and getting out of debt. You don’t, however, need to be a financial planning expert to have a firm grasp on what each of these concepts means and how they impact you. Use this guide to gain a deeper understanding of how they work together to lay the groundwork of a solid financial foundation.

1 Budgeting
At the very basic level of personal finance, you should understand the need for, and value of a budget. A budget or spending plan is a road map for telling your money what to do each month. At its simplest, a budget lists how much income you have coming in, compared to what’s going out each month.

I recently did a five year budget plan, even including travel and leisure. Creating a detailed and​ ​written budget allows you to make smarter decisions with your finances on a daily basis.

When you create a budget, you begin to see a clear picture of how much money you have, what you spend it on, and how much, if any is left over. Ideally, you’ll have a surplus left over which you can use to save for retirement, build up your emergency fund, pay down debt or apply to other financial goals.

The simplest way to create a budget is on paper, you can also use a spreadsheet, consider testing out different approaches each month to find the one that best fits your needs and style.

2 Cutting Expenses
After you’ve successfully created a basic budget, you’ll have a much better understanding of where your money goes and where you can possibly trim expenses. For many people, this is as simple as cutting back on some of the little things that can add up. For others, it may mean taking a closer look at spending to make deeper cuts in order to create a wider gap between monthly inflows and outflows.

Why is reducing expenses important? Three reasons. First, it can free up more money in your budget so you’re less inclined to rely on credit cards or loans to cover spending gaps. Second, if you have debt, adding extra money back into your budget can help you pay it off faster. And third, having extra money can help you boost your emergency fund or grow retirement savings.

My cuts included Cellular / Laptop contracts, I overspent on calls due to not limiting the accounts. In 2016 I closed all credit cards and created a savings for those unexpected payments. Where I saved the most, was once I closed my clothing accounts. The interest alone went into thousands.

3 Getting Out of Debt
Even after creating a sound budget and cutting unnecessary expenses, you may still find yourself with lingering debt to get rid of. Getting out of debt becomes even more difficult when you’re facing a high interest rate on credit cards or loans. One of the most important steps in getting out of debt is to pay more than the minimum amount due each month.

Create a side-hustle, generate an extra income and begin settling all those bills.

4 Saving for Retirement
With fewer companies offering full pension plans, it’s become more important than ever to save and plan for your own retirement. Unfortunately, many people feel that they simply don’t have ​enough money left over each month to save.

This I refer to as the “pay yourself first” method. Retirement savings needs to become a priority instead of an afterthought. If you’re not saving for retirement yet, revisit your budget to see if you have room to include it.

5 Insurance and a Will
You’ve created a budget, cut expenses, eliminated your credit card debt and have started saving for retirement, so you’re all set, right? While you’ve definitely come a long way, there is one more important aspect of your finances that you need to consider: insurance.

You’ve worked hard to build a solid financial footing, so it needs to be protected. Accidents and disasters can and do happen and if you aren’t adequately insured it could leave you in financial ruin. You need insurance to protect your life, your ability to earn income, and to keep a roof over your head.

Life insurance, disability insurance and homeowners’ insurance can help with those scenarios.

Do research, find out from loved ones which insurance organizations work well. Complete a Will of Testament.

The goal is not to be rich, but to be financially free.