How to create a financial plan that is tailored to you

1. Analyzing your current financial situation

To create an effective financial plan, we must first gain a clear overview of your current financial situation. Let’s walk through this important process together.

Recording income

We start by systematically recording all sources of income. It is important to consider not only your regular salary but also to identify all additional income streams. A detailed list of all income and expenses is the first step toward a successful financial plan.

You should capture the following sources of income:

• Salary and bonuses

• Secondary income

• Rental income

• Investment income

• Other regular payments

Listing expenses

When it comes to listing one's expenses, it is worth dividing them into fixed and variable expenses. For a better overview, we divide the expenses into various categories:

Fixed expenses:

• Rent or mortgage payments

• Ancillary costs: basic fees for electricity, water, internet services

• Health insurance

• Mobility: car, public transport

• Insurance

• Taxes

Variable expenses:

• Food & non-food items

• Leisure activities

• Clothing

2. Determining assets and liabilities

The last step of our stocktaking is a complete capturing of all assets and liabilities. This provides a clear overview of your overall financial situation.

Listing assets:

• Savings in the bank
• Securities
• Real estate
• Valuables
• Retirement savings pillar 3a

Listing liabilities:

• Loans
• Installment payments
• Leasing
• Other liabilities

For effective control, we recommend reviewing your finances on a regular basis. An annual review helps to identify any irregularities early on and to take appropriate corrective action. It is also important to collect all receipts and keep track of smaller amounts for which you may not receive a receipt.

It is especially important to set aside time once a month to document all income and expenses in your financial plan. This routine helps you stay on top of your finances and avoid potential tight spots.

3. Defining financial goals

After analyzing your financial situation, it is important to define clear goals. In doing so, we use the SMART method, which ensures that the goals we set are specific, measurable, actionable, realistic, and timed.

The key criteria for our goal-setting are:

• Specific: Determine specific amounts and purposes
• Measurable: Measure your goals
• Actionable: Attainable with the available resources
• Realistic: Within our means
• Timed: Tied to a clear timeframe

Short-term goals

Our short-term goals should span a period of 12 to 24 months. These goals are particularly important for your immediate financial stability. Typical short-term goals are:

• Building emergency funds
• Reducing credit card debt or other liabilities
• Saving for specific purposes
• Building savings for vacation

Medium-term goals

For the timeframe of two to five years, we establish medium-term goals. These goals usually require greater financial efforts and a well-thought-out savings strategy. This includes:

• Down payment for a property
• Buying a car
• Further reducing debt
• Family planning

To save for medium-term goals, it is advisable to use a current account or fixed deposit account, depending on the time horizon.

Long-term goals

Long-term goals span a timeframe of more than five years. These goals require particularly careful planning and regular monitoring. Typical examples are:

• Building retirement provision
• Real estate financing
• Wealth creation for children
• Achieve financial independence

For long-term goals, it is especially important to take advantage of the compound interest effect and invest your money accordingly. In addition, you should factor in inflation of at least 2% in your planning.

To achieve your goals successfully, regular review and adjustment are essential. A quarterly review is a realistic aim in this context. In particular, if there are significant life changes such as a new job, childbirth, or relocation, your goals should be reassessed and adjusted as necessary.

4. Draw up a realistic budget plan

Drawing up a realistic budget plan is the key to implementing your financial goals. We look at how we can best split income.

Applying the 50-30-20 rule

50-30-20 is a tried-and-tested rule for balanced budgeting. This rule splits the monthly income into three main categories:

• 50% for basic expenses: This includes rent, electricity, taxes, and social insurance contributions
• 30% for personal needs: This includes leisure activities, eating out, and shopping
• 20% for saving and investments: This share is intended for long-term wealth accumulation and debt repayment

To implement this rule effectively, we recommend setting up separate accounts for each category. This prevents you from even trying to use dedicated funds for a different purpose.

Factor in emergency money

Emergency money is your financial insurance against unexpected expenses. As a rule of thumb, we recommend setting aside two to three monthly salaries for emergencies. This provision should ideally be kept on a separate current account in order to:

• Have access to it anytime
• Benefit from deposit protection
• Generate potential interest income

5. Identify savings potential

To optimize your budget, it is important to distinguish between fixed and variable costs. Fixed costs such as rent, insurance, and basic fees can usually only be reduced in the long term, while variable costs such as groceries and leisure expenses can be adjusted in the short term.

To identify potential savings, we recommend:

1. Regularly reviewing fixed costs
• Comparing insurance premiums
• Optimizing bank fees
• Challenging the need for paid subscriptions
2. Optimizing variable expenses
• Reducing grocery costs through mindful shopping
• Lowering energy costs through efficient behavior
• Critically assessing leisure expenses

For successful budgeting, it is important to ensure that your housing costs, including utilities, do not exceed one third of your net income. This provides the necessary financial flexibility for other essential expenses and savings goals.

From the outset, your budget planning should be realistic. If in doubt, it is better to be cautious, especially during the start-up phase or if your income is unpredictable.

6. Joint definition and implementation

Selecting appropriate investment strategies

Selecting an investment strategy that is right for you is key for your long-term financial success. After defining your goals and drawing up a budget plan, we need to determine how your money should be invested.

Determining risk appetite

Your investment strategy is based on five different risk profiles that differ based on expected risks and returns. We distinguish between the following profiles:

• Conservative: Valuing capital preservation more than return opportunities
• Balanced: Largely focused on capital preservation, but appreciate selected return opportunities
• Dynamic: Provides a higher risk-return profile
• Growth: Focused on long-term growth
• Opportunistic: Aimed at achieving maximum returns

The selection of your risk profile depends on various factors such as professional situation and income.

Defining an investment horizon

The investment horizon is a further important factor driving your investment decisions. Depending on the horizon, different types of investment are advisable:

1. Short-term (up to 3 years)
• Focus on security and availability
• Suitable for specific acquisitions
• Current account or fixed deposit preferred
2. Medium-term (3-5 years)
• Balanced mix of security and return
• Suitable for larger acquisitions
• Combination of fixed deposit and conservative funds
3. Long-term (over 5 years)
• Higher return opportunities
• Suitable for retirement provision
• Broader mix of various types of investment

With a long-term investment horizon of 15 years, investors in Swiss equities have not lost any money over the last 100 years. This shows how important time is in investment decisions.

Mind diversification

Broadly diversifying investments is the key to minimizing risks. We should diversify assets across various asset classes:

Main asset classes for best possible diversification:

• Savings (savings account, ETF savings plan)
• Securities (equities, bonds, funds)
• Real estate
• Commodities (particularly precious metals)
• Alternative investments

The more differently our investments perform, the better the diversification. For example, when stock prices fall, demand for government bonds tends to rise, increasing their value.

When diversifying, we also take into account different sectors, countries, and currencies. This kind of geographic and sectoral diversification further helps to reduce risk. It is particularly important not to focus too heavily on our home market, but to consider international investment opportunities as well.

For practical implementation of your investment strategy, the use of ETFs (Exchange-Traded Funds) or mutual funds is recommended. These offer broad diversification and allow us to invest even smaller amounts across a wide range of assets. We pay close attention to the cost structure, as high fees can reduce returns.

Review and adjust your financial plan regularly

A regular check-up of your financial plan is just as important as its initial creation. Systematic review helps you stay on track and achieve your financial goals.

Annual review

An annual review of your financial plan is the optimal rhythm to keep both short-term and long-term developments in focus. You should take the time to systematically analyze the following aspects:

Annual review checklist:

For an effective review, it is advisable to schedule a fixed date in your calendar. On average, a thorough financial check takes about 1–2 hours a year. This time investment in your financial future will pay off in the long run.

7. Adjustments in case of significant changes

Certain events require an immediate adjustment of your financial plan, regardless of the regular review cycle. Key occasions for an update include:

• Professional changes
• Job change or promotion
• Self-employment
• Unemployment
• Personal changes
• Marriage or divorce
• Birth of a child
• Relocation or property purchase
• Inheritance
• Health-related changes
• Long-term illness
• Relatives requiring care
• Occupational disability

In such cases, it is important to thoroughly review your entire financial plan. Particular attention should be paid to updating your insurance coverage and retirement provisions. Studies show that over 70% of couples view financial adjustments as one of the greatest challenges in times of transition.

Short-term achievements:

• Meeting your monthly savings goal
• Paying off a credit card
• Establishing an emergency fund

Long-term achievements::

• Reaching the equity ratio required for property financing
• Building up a specific investment volume
• Achieving financial independence

Relevant key figures include:

• Savings rate (as a percentage of net income)
• Growth in net worth
• Debt reduction
• Investment returns

Regularly reviewing these key figures not only provides insight into your progress but also helps you to identify potential issues early. Of particular importance is reviewing wealth development in relation to your original objectives.

Professional monitoring of your finances also enables you to respond quickly to changes.

Reviewing and adjusting your financial plan is not a one-time event but an ongoing process. Regular reviews ensure that your plan remains up-to-date and your financial goals are attainable. It is crucial to remain flexible and willing to adapt your plan to changing circumstances.