The first two steps: a budget and a net worth statement

Before talking about investments, accounts or taxes, two documents are needed: a budget, which tells you what comes in and goes out each month, and a net worth statement, which tells you what you own and what you owe. They are not complicated to prepare, and without them the rest of a financial plan rests on guesswork.

Step one: the budget

Start by tracking your income and expenses for at least a month, and ideally a whole year, since some costs only come up once or twice a year. Then group your expenses into a few broad categories: housing (rent or mortgage, insurance, utilities), transport, food, outings and leisure, personal spending, children, bank fees, gifts and donations, and savings.

It helps to distinguish fixed expenses, such as rent or a loan payment, from variable ones, such as restaurants or holidays, because the variable ones are where you have the most room to act. A common rule of thumb is to allocate about half of your income to needs, a third to wants and a fifth to savings and paying down debt. It is only a starting point, but it gives you a reference.

The most useful habit is to pay yourself first: as soon as your income arrives, set aside the amount you have decided to save, before spending anything else. Without regular savings, none of the other steps really matters. Review your budget at least once a year, or whenever your situation changes.

Step two: the net worth statement

Your net worth is simply what you own minus what you owe. On one side, list your assets: cash and bank accounts, investments and registered accounts, pension plans, property, vehicles and anything else of significant value, each at its current value. On the other side, list your debts: mortgage, car loan, student loans, credit cards and any other loan, at their outstanding balance. The difference is your net worth.

If you have assets in several countries, list each one in its own currency, then convert everything into one currency at a given date, and note that date.

Update the statement every three to six months. What matters is less the figure at a given moment than how it evolves over time, and whether that matches what you had planned.

Then, everything else

With these two documents in hand, the next questions become much easier to answer: how much you can realistically save, which projects can be financed and when, whether your debts are reasonable, and where each sum should be kept. The guide on time horizons covers that last question.

General information, current as of October 2026.