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Your Road to Retirement in Seven Steps (and You Don’t Need a Financial Advisor) + Free PDF

Excitement about retirement remains at an all-time high, but almost 60% of people are stressed out with the thought of planning for it. When thinking about retirement, 43% of workers are making guesses about how much they need instead of using their actual expense information. The statistics continue to get worse: More than 20% of workers have less than $5,000 saved for retirement, and a whopping 70% of Americans plan to keep working through retirement.

Despite the challenges listed above, understanding your personal finances is much easier than you think, especially with access to the technology available. And you don’t need to use a financial advisor or any other kind of specialist unless you really want to.

If you are worried that you haven’t started and don’t know where to begin, don’t panic. You’re not alone! But you need to get started now; you need to develop your financial plans instead of meandering down the road to retirement with no real strategy in mind. This post will get you started in the right direction followed by additional posts to help you retire on your own terms.

Can you imagine working your entire life and getting to your retirement age, your golden years, and you can’t stop working, or even worse, you have to settle for a lower standard of living? Also, the stress and mental anguish of knowing you’re ignoring the inevitable of retirement is exhausting.

For me, I knew I couldn’t keep pushing it off, so I committed to ensuring my retirement would be financially successful using the steps I detail in this and later posts. Once I started to see progress, I pushed hard to become financially independent as early as possible. Soon after, I decided to walk away from my day job completely, which allowed me to retire at the age of forty-six.

Retiring early may not be your goal but retiring on your terms should be.

Today, I’m part of the FIRE movement, which stands for Financial Independence, Retire Early. I like the acronym FITR better, which is Financially Independent, Time Rich, because I worked hard and fought for my independence. “Time wealth” means that you can spend your priceless time in any way that lines up with your values, which is really what the goal of retirement should be.

So, how do you begin? Let’s go over seven steps to get you moving in the right direction on your road to retirement. The best part is that you don’t need a financial advisor.

This blog post goes over how to gather your personal finance information AND key concepts on what to do with the information once you obtain it.

**This post contains affiliate links and On the Move with Liza and Stephen will be compensated if you purchase after clicking on our links, with no cost to you.

Table of Contents

1. Understanding What Is Happening with Your Money: Income

2. Understanding What Is Happening with Your Money: Expenses

3. Debt

4. Savings and Investments

5. Investing Without Any Money

6. Increasing the Difference Between Income and Expenses

7. Using Technology to help you with your Personal Finances


Seven Steps to Understanding Your Personal Finances to Get You Started on Your Road to Retirement

1. Understanding What Is Happening With Your Money: Income

One of the biggest problems with our personal finances is that we often don’t know what is occurring with our money. We need to understand how much money is coming in and how much money is going out. The better you understand your money, the more able you’ll be to do proper planning of your personal finances. The easiest way to start is to look at everything monthly. Of course, one way is to seek out a financial advisor to help us understand everything, but if you follow what I describe here, that becomes unnecessary.

Finding Your Take-Home Income

The purpose of the table below is to help you understand your finances by seeing how much money comes in. We are looking at your take-home money – the money that goes into your bank account. We don’t want your gross income, which is how much money you make before taxes, deductions, etc., because that money is already being used.

A simple way to understand your money is to evaluate it both from a monthly standpoint and an annual perspective. This gives you a way to monitor the progress you are making, especially since most expenses and debt are paid that way, too.

Here are the important items to know for the income worksheet:

Type of Income: This could be a salary from employment, profit from rental properties, side job earnings, etc.

Take-Home Payment: The amount that goes into your account with each payment after deductions is what we want to focus on.

Frequency of Payment: How often are you paid?

· Weekly = 52 payments

· Every other week = 26 payments

· Monthly = 12 payments

· Twice a month (e.g., the 1st and 15th) = 24 payments

Calculated Annual Take-Home Payment: This is calculated by multiplying your Take-Home Payment and your Frequency of Payment together.

Calculated Monthly Payment: This figure is found by dividing your Calculated Annual Take-Home Payment by twelve.

If your income is inconsistent, then we need to find a pattern that is representative of the entire year. This could be done by adding multiple paychecks and then dividing by the number of paychecks. Once you find that number, follow the above example to get your average monthly and annual income.

To access this information, log on to your bank account to determine the amounts. Then, you can start filling in the chart. You could also use an app called Personal Capital which I detail later in this post.

2. Understanding What Is Happening with Your Money: Expenses

Understanding your expenses (money going out) is the next part after you have your income numbers. Getting this information is not as easy as your income because it isn’t as concrete. The key here is to do your best and learn as you go along or link your accounts to Personal Capital.

Home expenses, transportation costs, food expenses, rent, etc., …everything needs to be included in planning out your personal finances. Even your cash needs to be included in the expense column. We need a complete picture of what is happening to your money.

Looking at everything monthly makes it easier for planning and monitoring purposes. Once you have completed these steps, you will have an opportunity to evaluate your plan every month.

If you’re someone who doesn’t track your expenses, you’re not alone. Believe it or not, 56% of people do not track their expenses. The crucial point is to start.

This template is a broad brush and uses big categories. One exercise to consider is to compare what you think you spend with your actual expenditures. To do this, print two copies and start with what you think are your expenses before doing any research. Next, complete the categories with the actual data. How close were you to the actual? If you were close, that’s surprisingly good!

When thinking about retirement, 43% of workers are making guesses about how much they need instead of using their actual expense information. So, let’s get started and find out your real numbers.

Some of your bills will be monthly, which is great. If you have annual bills, divide by 12, or if they are quarterly, divide by three to get the monthly amount. What if the bills are staggered where you pay different amounts per month? Total the bills from the year and divide by 12.

You want to look at this both monthly and annually to monitor what is happening. The best way to do proper planning, especially with personal finances, is to get a complete picture. The best way to plan for your retirement is based on your own experiences.


3. Debt

Debt is the next piece of the puzzle for uncovering what is happening with your money. Luckily with debt, most of these expenses are monthly so they’re easier to track.

When listing debt, put them in order from highest interest rate to lowest. The higher the percentage, the more money you will need to pay it off overall. Targeting the highest-interest debt first is called the Debt Avalanche Method. This method makes the best use of your money because it’s targeting high interest rates. In this instance, you would pay the minimum amounts on your other debt until you pay the higher interest rate debt off. There are other methods, but the best method is the one that you can stick with to get it done:

The Debt Snowball method focuses your payments on the lowest balance first. People who use this method focus on reducing the number of debtors to make progress.

Consolidating debt is another method of paying off debt. This method reduces the number of companies you owe to just one. Be careful because there may be costs associated with transferring debt to another company; however, depending on the interest rate you are paying, this could be to your advantage, too.

The Credit Card Shuffle is another method. This method uses the balance transfer offer when you open a new credit card to get better interest rates. Sometimes, your existing credit card may even offer this. The cards will offer a 0% balance transfer fee and 0% interest on a limited basis as part of the introductory offer. Make sure you check the rates you’ll be subject to when the introductory offer ends.

When I was paying off my debt, credit cards, mortgage, and student loans, I did a combination of both the Debt Avalanche Method and Credit Card Shuffle. I transferred as much money as I could to the 0% balance transfer fee and 0% interest rate cards and paid the minimum payments. I then paid off the remaining high interest rate debt that was left over. I kept doing this until my debt was paid off!

4. Savings and Investments


How much money do you have saved in your checking, savings, and money market accounts? This is your liquid cash and is easily accessible.

What about an emergency fund? An emergency fund is typically three to six months of funding that you save in case of emergencies. Some people even promote 12 months. One of the ways to figure out how much money you need depends on how much debt and expenses you have. The more debt and expenses, the more money you’ll need to cover everything in an emergency.

Today, only 28% of Americans have an emergency fund.

You never know when life will take you down an unexpected path – this isn’t something we can control. How we respond to it


If you have money saved, good for you. If you have some money in a retirement account or invested in a brokerage account, even better. If you haven’t started, the best time is to start now. Time in the stock market because of compounding interest is the eighth wonder of the world, a quote attributed to Einstein.

Compound interest when applied to the stock market is not a set interest rate you earn, although it is similar. Instead, think of it from a value point of view. When the value of your investment increases, you earn money. Leaving your money in the stock market along with the newly earned money will earn you even more over time. Always adding that new amount to your investment is a win-win situation.

Unfortunately, Compound interest on your debt works the same way – you pay on your debt AND on the interest that accumulates. The longer you have debt with compound interest, the more money you will have to pay. Maybe it should be called one of the biggest problems of the personal finance world too!

The problem here is that the average credit card interest rate is 16%, which is drastically higher than the average interest rate at your bank to earn money. So, you need to get rid of that debt as soon as possible. The point is that your debt is making credit card companies rich. We want to invest that money in the stock market and have YOU earning money toward retirement. But we need to start investing as soon as possible. We want every single one of your dollars (your “soldiers”) working hard for you.

List how much money you have by investment type using the spreadsheet below. When you enroll in Personal Capital it has a section on their dashboard called Investing which helps you to understand the same concepts including performance, how your money is allocated and the sectors where the money is invested. However, for tax planning purposes it becomes extremely important which investment vehicles you use. Therefore, it’s a good idea to fill out the grid below for use later.

5. Investing Without Any Money

Looking at how much money you are bringing in and how much is going out was the first step in making our roadmap. If you subtract your total monthly expenses (including monthly debt) from your total monthly income, how much is left over? If it’s a negative number, there is work to do. If it’s a positive number, that’s where you start investing or saving. Maybe there is still more opportunity that you’re not seeing. Here are some ways to find money to invest.

Categorize Your Expenses

As you look at your expenses, the next thing is to try and separate them into two categories: discretionary versus non-discretionary spending.

Discretionary spending includes those expenses that contribute to your quality of life BUT may not be a necessity for living.

Takeout food is a good example of discretionary spending. You need to eat, but how you are eating is the key here. Typically, cooking and eating your meals at home is much cheaper. While it could take longer to cook and clean every day, with some good planning, you can cook larger dishes for multiple meals and eat them over time. The freezer is your friend! The money that you didn’t spend on takeout can be invested or saved.

Non-discretionary spending includes the expenses that are needed to live.

An example of non-discretionary spending could be a utility bill. You need the lights on and electricity flowing to read this blog, right? Just like the food example, there are ways in which you get the same thing but pay it out differently.

Continuing with our electric bill example, some places have reduced rates on your bill if you time it right. Check the peak versus the off-peak rates to decide when you might save money on your bill. During off-peak hours, it may be the right time for you to do laundry or run your dishwasher. With some planning, you can do the same things but with reduced costs. Again, the money that you didn’t spend can be invested or saved.

You need to look at both types of expenses to see where you can make changes. The more positive changes toward reducing your expenses, the more opportunities you will have to save or invest.

Other Opportunities to Save

Can you sell or donate anything? On my road to retirement, we looked at every expense and questioned them all. The path that led us to quit our jobs started by sorting through one drawer at a time. This simple act helped to change our financial mindset and minimize our stuff. We realized how much money we waste on items we didn’t need just by looking at our drawers and walking around our home. Selling, throwing out, and donating became the new game.

A modern adage: The best things in life aren’t things!

If you’re looking for ways to act, start with the things you already have. Once you know the goal, taking even these little steps will help get you there. For us, every drawer felt like we were taking one step closer to our new lives and another step toward controlling our personal finances on our road to retirement.

The key things to realize are that the more things you have, the bigger the place you need; the more things you desire, the more you must work to get them. In this regard, when you stop to think about it, your things own you instead of you owning them. The less that you need, the more freedom you have. And as I said before, the money that you didn’t spend – and the money earned from selling things just sitting around – can be invested or saved.

The main takeaway here is that you need money to save or invest. Reducing your expenses and increasing your income are the two ways to do it. The bigger the difference between your income and expenses, the more you’ll have to save or invest.

So, how do you increase the difference?

6. Increasing the Difference Between Income and Expenses

Ultimately, the goal is to make more money, spend less, and invest the difference while you are working. Therefore, we need to increase this gap or difference. The bigger the difference, the more money we can invest.

As stated above, the goal is to increase your investments, which in turn will make you more money via compound interest through those investments.

What about ways to increase your income? The beauty of income is that there is no limit. For expenses, you can cut some but never eliminate every bill, yet for income, the sky’s the limit. At your current job, are there opportunities to get a raise, be promoted, or work overtime? Can you expand the work you are doing and turn it into a side hustle? Can you do something different like be an Uber driver or do independent work on Fiverr? There are a ton of side hustles for you to make more money.

For me, every time I received a raise or bonus, I didn’t want to see it. I didn’t want to feel the new money because it was too tempting to spend it. I was already living on the money I was making, so why add to it? I automatically paid my debt or added my raise or bonus to my emergency fund or investments.

The goal is not to be the richest dead person. For me, it is to be the time-wealthiest living person.

Sometimes this may mean you need to work harder or make some sacrifices. There is a saying that is really very true: “Easy choices, hard life; hard choices, easy life.”

A key point here is that income is only important for increasing the difference between income and expenses so you can invest the difference. We all know people who make an insane amount of money but with expenses just as high. These are the people who are keeping up with the Joneses on a perpetual hamster wheel. This is not as impressive as someone who has a high income and a low expense rate who saves or invests the difference. The person who works on their own terms, or even better, retires early – this is what is impressive!

You need to get after it. You have a bigger purpose and goal in mind with these hustles and hard work. You want to be able to pay off debt, increase your investments, retire, gain more control over your life. Who knows? Maybe even retire early.

7. Using Technology to help with your Personal Finances

We have technology to gather information, so why not use it? When I was starting my personal finance journey, I looked for tools that would help me make strategic decisions and act.

Personal Capital is a powerful and free online and application financial tool that pulls together all your accounts in one place, so you can monitor what is happening. Your information in one place to track your financial life with a very easy to use dashboard.

I chose Personal Capital over other apps because it was everything that I needed all the pieces in one place:

  • Overview: your net worth, assets, liabilities, and transactions

  • Money coming in (Income), going out (Expenses), Savings and Debt all under one section called Banking.

  • Investing helps you to see your performance, where your money is allocated and the sectors that you are investing in.

They have a version called Wealth Management where you speak to a live person who helps you manage your money for a fee. Before considering this option, continue reading my investment series as it may not be necessary to use it other than the functions described above.

I have written a deeper analysis of Personal Capital here if you want to get a fuller picture of both how to use it and its capabilities.

Conclusion and Closing Thoughts

Understanding your personal finances has become much easier than in the days when you had to seek out a financial advisor. And once you start, like a snowball rolling down a hill, you gain speed and traction, and you start to see results. It is going to take some work, but nothing presented here is outside your scope of capability.

Courage means doing the hard things, and that extends to traveling the road to retirement. Gaining control of your personal finances will give you greater control over your life. You know that retirement is inevitable. This is the reason you need to plan for it. Do it now while you can, while you are still working. You can beat the odds!

Action Steps:

  1. The Financial Template from On the move with Liza and Stephen is located on Google Sheets. You can download and save them to edit in Google Sheets, Excel or as a PDF if you prefer.

  2. Download: Managing Your Expenses and Increasing Your Income

  3. Set up the free account on Personal Capital to aggregate your money.

  4. Follow us on Instagram: @onthemovewithlizaandstephen to see where we are and come along on our adventure.

  5. Consider subscribing to our blog. If you have questions, try reviewing our other posts or sending us an email.

Personal Capital Advisors Corporation (“PCAC”) compensates OnthemovewithLizaandStephen (“Company”) for new leads. (“Company”) is not an investment client of PCAC.

1 Comment

Very informative! Getting out some yellow pads and pencils—on it!!

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