“If you fail to plan, you plan to fail” — business proverb

Sadly, until about eight years ago, I’d never done any financial planning in my life.

Back in 1998, I started with a single, simple goal: to rid myself of the massive debts which I’d built up from gambling, overspending and generally squandering money. In total, across thirteen credit cards and three personal loans, I owed just short of £50,000.

Thanks to a combination of self-control, better budgeting and selling assets (plus the generosity of my wife), I managed to clear this debt within a year. Freed of the burden of crippling debt, I was able — for the first time in my adult life — to face the future with confidence.

It was at this point that I took my first positive steps towards serious financial planning: I created various goals, milestones and targets to meet as I went through life. Initially, my first target was to build up cash savings of £5,000, which took less than a year. I have since set myself progressively more challenging goals.

Anyway, in order to meet my targets, I had to improve my money management by several degrees of magnitude. Despite being a mathematician by education and having worked in financial services since the late Eighties, I wasn’t terribly good at managing my financial affairs! Hence, I had to adopt better habits in order to help me to manage my money better. Here’s what I came up with:

Budgeting and spending

The first rule that I had to learn has been around for as long as money itself: the Romans phrased it as “sumptus censum ne superset,” or “let not your spending exceed your income”. So, I learned how to budget and made sure that there was something left before each payday.

I also started to trim my expenses by making sure that I paid the best price for everything that I bought, from my mortgage right down to the smallest monthly expenses. I started haggling for discounts on larger purchases, and used price-comparison websites to cut the cost of everyday goods. However, nothing saved me so much money as simply cutting back and spending less — these days, I’m a wiser miser!

For the record, we Brits took home a total of £831 billion last year, yet we spent £1,005 billion, which was £174 billion (21%) more than we earned. Thus, we have a long way to go before our national overspending habit is under control!

Borrowing

Having come very close to bankruptcy in the late Nineties, I’m now a passionate anti-debt crusader. Nevertheless, I recognise that, for most adults, debt is a fact of life. Indeed, the average unsecured (non-mortgage) debt comes to about £4,000 per adult, which is a burden that we could all do without.

Naturally, the first debt to tackle on your way to financial fitness is your mortgage, because it’s the biggest millstone around your neck. If you’d like to find a better home loan, my advice would be to instruct a reputable no-fee mortgage broker to search the entire market (over 8,500 loans) on your behalf. Awarding-winning broker London & Country Mortgages is one such firm.

While hammering your home loan, you should also take steps to reduce the cost of other borrowing, particularly any balances on credit and cards, most of which charge rates of between 15% and 30% a year! One sound move is to shift these debts to one of the scores of cards which charge no interest on transferred balances for up to a year. You’ll find a super selection of 0% cards here.

In addition, if you need a personal loan, don’t sign on the dotted line until you’ve read my ten tips to choose a loan and paid a visit to our Personal Loan centre. Lastly, you can learn to be a brainier borrower by reading Cheaper Borrowing Made Easy!

Saving

Once I’d destroyed my hefty debts, I started saving in earnest. Initially, I saved into cash mini-ISAs, in order to earn tax-free savings interest, and then put the remainder into Best Buy easy-access savings accounts. If you’d like to develop superior savings skills, read Your Ultimate Guide To Saving.

Protection

To be perfectly honest, most insurance policies aren’t worth the paper they are written on, especially those sold by high-street banks and retailers. In particular, payment protection insurance and extended warranties are ridiculous rip-offs!

On the other hand, the right insurance cover is vital if you want to protect your most important assets, such as your earning power, home, car and so on. So, before you buy life, home, motor, medical, travel and other types of insurance, read Eight Ways To Protect Your Wealth and get quality quotes from our Insurance centre.

Investing and pensions

I’ve grouped these two topics together because, in many ways, they are one and the same. After all, a pension is nothing more than an investment which is designed to provide you with a retirement income. Indeed, you don’t even need a pension to save for retirement: you could invest in shares inside a tax-free ISA shelter, or even in cash (although this is an awful long-term investment).

Still, thanks to the pensions A-Day changes which came into effect on 6 April, pensions have become much more attractive to most workers. Indeed, you can now put as much as you want into pensions, although you can only claim tax relief on contributions of up to 100% of your income, with a ceiling of £215,000 a year. Learn more and check out the offers in the Fool’s Pensions centre.

As for investing, I mean only one thing: investing in the stock market to build long-term wealth. Most of my wealth is tied up in individual shares which I’ve picked myself or have acquired through attractive employee share schemes. However, a fair slice of my wealth is invested in the cheapest, simplest stock-market investments: index trackers.

These merely track an index up and down, such as the FTSE 100 index, which measures the value of the UK’s one hundred biggest listed companies. By doing away with human fund managers and allowing a computer to run the fund, an index tracker can charge investors ultra-low fees.

I regularly invest in index trackers or index-tracking shares and also throw in the odd lump sum, as does my wife. For the record, I think that the FTSE 100 index looks cheap in historical terms, so I’m happy to ignore other financial pundits and keep stuffing my money away inside simple tax shelters to build a better future!

So, there you have it. No tricks, no magic spells, no “double your money” schemes. I got to my first £100,000 by getting rich slowly and surely and, if you follow the same road, you’ll get there too.