Articles, FIRE

How to Create a Wealth Plan – Get Started Now

Written By: João Uva
Reviewed by: Mike Reyes
Last Updated February 2, 2022

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a family celebrating after creating a wealth plan

Creating a wealth plan is something not everyone is able to do. Otherwise, everyone would be able to easily build wealth. More than the plan behind it, it also requires stellar execution. This is where most wealth plans fail. Being able to implement a plan early on is easy but to put it into practice for a long time requires certain skills that are more demanding. It takes persistence, resilience, and the ability to adapt over time. A wealth plan should be adapted to different stages of life, and in order to do so, it will require a lot of effort. A well thought out wealth plan rests on three pillars: 

  • Save
  • Invest 
  • Repeat

These are the core principles of every wealth plan. Disregarding even one will render a wealth plan useless. An important aspect to consider is that a wealth plan should be tailored to each individual’s needs and goals. So pay attention, and make sure that these simple steps are followed in order to create a wealth plan that allows individuals to achieve their dreams.

Advantages of creating a wealth plan

A wealth plan is a wonderful resource to help individuals achieve their monetary goals. As it allows them to plan, and use it as a guide throughout their journey. However, having a wealth plan is not a guarantee of anything. Achieving wealth is like building a house. Thus, having the best architectural design will not ensure that the final product will be outstanding. This is why execution is the differentiating factor in achieving wealth. There are certainly several advantages to having a well-thought-out plan to help individuals in this process, such as:

  • Clear vision over goals
  • Easily control expenses and estimate savings
  • Automate investments
  • Define a strategy to achieve wealth
  • Adapt your strategy over time

In essence, a wealth plan acts as a roadmap to financial freedom. The main difference is a map usually has a clear path towards a destination. A wealth plan, on the other hand, is filled with unknowns and obstacles that may lay ahead. 

Define goals

There are stark differences between different individuals and their material goals. One of the most crucial things is to determine material goals and desires. Since we are all very different from each other, one individual might have the goal of being a millionaire, and another might be focused on being a billionaire. 

Although a wealth plan is necessary in both cases, the approaches to achieve them will be extremely different. For this reason, it is important to define exactly what is trying to be achieved. A wealth plan will be adapted to individual goals, depending on what the ultimate goal is. The timeframe to accomplish it will also affect how a wealth plan should be laid out. These simple questions allow individuals to formulate the basis of what their wealth plan should look like:

  • What material desires do I have?

Determining material desires early on in life is probably the most important thing to help anyone create a wealth plan. Someone might have a few material goals, and someone might have a vast number of things that they want to own. Knowing exactly your material wishes also helps to manage expectations.

  • When do I want to achieve these material desires?

This is another important point to define a wealth plan. If the goal is to buy a certain thing in a short period of time, the wealth might need to be adapted for that. If on the other hand, the goal is to create long-term generational wealth, the wealth might be adapted to reflect that.

  • What do I want my lifestyle to be like?

Another incredibly important part of defining a wealth plan is to envision a future lifestyle. Some people are more focused on what their life is like than what they actually own. This also helps to set out exactly what are the goals and makes it easy to determine the best way to achieve them.

These questions are essential and for one simple reason. They help to define expectations. When creating a wealth plan, expectations are one of the most important parts. Having low expectations increases the chances of being content with the ultimate outcome. Setting very high expectations can create additional stress, and be detrimental to your wealth plan completion.

Start with the basics

When it comes to basics there are two very important aspects to consider. The first one is saving, as it is one of the key steps in a wealth plan. One feature that is common across wealthy individuals is the fact that they save a high percentage of their income. Whether they are wealthy or not, this habit allows them to have more money than they need. With those savings, they can invest, and create new sources of income. 

Another important basic step is to create an emergency fund. It gives peace of mind to individuals, and if something goes wrong there is always protection. Although financial advisors debate on how much money should be on an emergency fund, it is very dependent on the individual’s needs. However, as a rule of thumb, an emergency fund should cover one year of expenses. This might sound overly conservative, but it is crucial in case something unexpected happens.


Saving is the backbone of every wealth plan, but why do people have a hard time saving money? One of the reasons is the fact that saving forces a person to sacrifice their present self, for the benefit of a future self. This concept is somewhat difficult to understand but it is the basis of savings. The idea is that in order to build wealth it will be necessary to delay spending. At least spending on things that do not produce anything. 

An interesting example is sports cars. Most people think of it as a deep-rooted desire that they need to achieve, however, in practical terms, they achieve very little. The purpose behind having a car is to get someone from A to B. It does not matter whether it takes 5 minutes or 7 minutes, or whether the individual arrives in style or not. Understanding these basic ideas behind saving is what allows us to build wealth.

Some individuals are clearly at the end of the spectrum when it comes to saving. They are cheapskates and they save everything they can. Think TLC Extreme Cheapskate. They sacrifice happiness in order to be able to save an extra dollar. There is also the polar opposite, which is an individual that continuously overspends, and gets into credit card debt. To be content during a wealth pursuit it is important that the savings mentality should be somewhere in the middle.


Budgeting is an incredibly resourceful tool. There is a high correlation between creating wealth and budgeting. Every successful wealth plan requires extensive budgeting. As it allows individuals to prepare their expenses and estimate their savings and investments. Budgeting can be hard, but thankfully today there are several tools that help to budget expenses. Budgeting creates a plan of savings and allows individuals to plan how much capital they will invest. This is why it is such a crucial part of every wealth plan. The simplest way to conduct any budgeting is through these steps:

Start with a simple budget that takes into account fixed expenses including:

  • Rent or mortgage payments, 
  • Utility bills
  • Car payments
  • Insurance (auto, health, and life)
  • Loans ( such as student loans, personal loans, and so on)

Add variable expenses, and define a maximum and minimum amount such as:

  • Groceries
  • Entertainment
  • Gasoline

Once all of these expenses are accounted for, it will be easy to have a very good idea of what the monthly savings will be generated. This is where it gets interesting. Although this is the hardest part of budgeting it is crucial to try to define future expenses. 

Some of the examples include college expenses if you have kids or a new car that you are thinking of buying or even that vacation that you take every year. These are certainly the most complicated expenses to try and figure out but they are important because it allows you to create a timeline of future spending. In turn, you will be able to plan your investments so that you can make sure that you have enough money to pay for all of this.


To truly be able to generate wealth it is mandatory to invest. Investing is the best way to put capital to use. When we consider a job, it is nothing more than selling time for money. Investing allows individuals to put that money to work in order to generate a return. This concept is perhaps the most differentiating aspect between wealthy people. They understand how important it is to use capital in the best way possible. There are several ways to deploy and allocate capital. Some might not be the best or most optimal, but they are still better options than keeping them in a savings account. 

Before even considering what investing strategies and approaches an investor should consider, it is crucial that they get familiar with some of the most basic and intuitive principles of investing. Considering a course, or a small 

Consider investing options

When it comes to investing there are so many different approaches and strategies that it is difficult to say what works best. It is truly dependent on the investor itself. Therefore it is important to consider all of the strategies, and thoroughly research them in order to find the most suitable. Some investors are able to achieve their wealth plan goals with consistent investments in index funds. This passive investment vehicle has slowly turned into the easiest way to accumulate and build wealth. However there are other options out there, and to consider them investors need to ask themselves the following questions:

  • How much time will I have to research, and invest my capital?

Index funds are extremely popular due to this. Most investors have limited time to search for investment opportunities. Therefore their best investment option is passive index funds that charge a low commission. It guarantees them an average return over a long time, without much effort. On the other hand, if an investor has time to research and thoroughly analyze investments then he or she might choose another approach.

  • What knowledge do I have to make investment decisions?

This is another crucial step in determining an investment strategy. Some investors might even have plenty of time to search and analyze investment ideas, but they might lack sufficient knowledge to make the right decisions. For that reason, it is always important to consider this aspect.

  • Do I really like to analyze and research investments?

Even if an investor has enough time, and has the necessary knowledge and experience to conduct his own investment decisions, it is important to know to which extent he actually enjoys it. Let’s face it, not everyone finds the task of looking through pages and pages of a company’s financial statements enjoyable. Not even some Wall Street analysts enjoy the process. With that in mind, it is another important factor to consider, that can define the best investment approach.


To truly be able to create wealth, investors need to take risks, and this is where it gets complicated. Risk is an inherent feature of our lives. We face risks every day in one way or another. Our ability to deal with them, and accurately assess their impact on our lives is what separates us when it comes to wealth building. Nobody has ever gotten rich by investing in treasury bills, so with that in mind, it is critical to understand that in order to accumulate capital, risks must be taken.

It is important to note that some investment risks should be avoided at all costs. It needs to be said that speculative, and highly volatile stocks are usually not the greatest option when it comes to allocating capital. However, some risks are inherent to capital accumulation, and investors need to be aware of them. There are several ways to invest that allow individuals to build wealth. 

  • Define your risk capacity, and risk tolerance
  • Plan investments according to the amount of risk you are willing to take
  • Adjust investments according to risk propensity
  • Adjust investments with age

The age effect on risk

Age is the most influential factor on an investor’s risk appetite. Risk is directly dependent not only on an investor’s risk profile, but age is the most determining factor. A wealth plan should account for this. For that reason, it needs to be adapted as investors get older. An investment strategy should shift over time. From riskier investments when you are younger to safer investments as retirement approaches, and the goal is now to preserve capital.

Capital accumulation

Understanding the difference between capital preservation and capital accumulation is crucial. A successful wealth plan rests on capital accumulation. Being able to accumulate capital at an early age is what allows investors to create wealth. Age plays a big role and determines whether an investment strategy should focus on wealth accumulation or wealth preservation. Our propensity to face risks diminishes with time. For that reason, a proper wealth plan should account for this. It is imperative that your initial focus should be wealth accumulation.

  • Early on focus on capital accumulation
  • As goals are achieved, slightly adjust your investments towards capital preservation


This is where most people end up failing. Consistency is everything when you are trying to build wealth. One year of high savings, and making the right investments can be helpful, but to build generational wealth it takes at least a decade of executing what we mention in this article. 

Be consistent

Being consistent in following a wealth plan is the only way to reach the ultimate goal. To accomplish this it is important to focus. Focusing on the ultimate goal, and how good it will feel to achieve it is the most important driving force behind consistency. It will motivate anyone to continue their efforts to accomplish what they set out to do in the first place. This is perhaps one of the most important parts of successfully creating wealth, and when it comes to investing these are the most important things to be consistent about:

  • Stick to a strategy
  • Avoid investments in areas that you are not familiar with
  • Avoid investments of speculative nature

Analyzing decisions and choices is the backbone of successful investing. Investors need to be able to stare down at their mistakes. Point out exactly what mistakes they made, and figure out exactly how to avoid them in the future. 


When asked about it, both Warren Buffett and Bill Gates both mentioned focus as the most important characteristic to be successful. To be able to successfully conduct a wealth plan takes more than just focus. Focus is the name of the game. Focusing your efforts on one single goal is what will ultimately define whether it is achieved or not. 

Some entrepreneurs even take focus to an extreme level. Obsession often has a negative connotation, but it can be an excellent attribute when used appropriately. Obsessing about goals might be negative but it can also be a driving force to accomplish them. Amazon founder Jeff Bezos has been very vocal about the company’s customer obsession. It is certainly one of the main reasons why the business has been wildly successful.

Read more: 27 Amazon Hacks to Save You More Money


We are humans, and whether we like it or not we need incentives to do things. Saving a high percentage of our incomes, and forcefully sticking to it is demanding enough. Perhaps one of the most important parts of a wealth plan is to create reward thresholds. As goals are achieved, it is important to receive a reward. This creates a positive association with the treacherous journey of wealth building. Forming a positive feedback loop, that will encourage individuals to continue on their path to financial freedom. In order to do this remember these important steps:

  • Set short, medium, and long term goals
  • Assign rewards for each goal
  • Complete each goal 
  • Reward yourself

Through these steps, you will be able to create and reinforce a positive feedback loop that rests on accomplishing your wealth plan.

Bottom line

It is clear by now how much planning, effort, hard work, focus, and resilience it takes to truly create and build wealth. The fact that it takes several skills, and they need to be applied over an extended period of time is the reason why not everyone can successfully complete their wealth plan. It takes hours, days, and weeks to carefully planning, and executing. It will certainly be time-consuming, and it will require constant focus, but in the end, it is one of the most rewarding things we can achieve in life. As we mentioned a well laid out wealth plan can be a differentiating 

Remember that life is much more than just wealth. It is ultimately about enjoying our time here with those we treasure the most. It is easy to get caught up in your goals and sacrifice happiness in order to achieve them. Ultimately that should not be the goal. Wealth cannot buy happiness, although it can help you achieve it – it is not a determining factor.

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