Creating a 5-Year Financial Plan

If you have ever read a book about personal growth, there's a fairly good chance that one of the topics discussed had something to do with setting goals. Having goals gives you something to aim at, and even if you miss, you'll be ahead of where you were before. There's also a quote which says that if you aim at nothing, you'll achieve it every time. It's very important to set goals, especially with your money. This will help you get traction and be on the track to becoming financially independent. Not only do you need to establish goals, but create and implement a plan to achieve those goals, now that's the hard part. Don't worry, it can be done, and when the goal is completed you will thank yourself for making it happen.

Every 5 years, you should spend a few days and contemplate where you would like to be five years from today. If you are married, your spouse has to be involved with this, otherwise it won't work. Do you want to have an emergency fund saved up? How much money do you want to have in your retirement accounts? How much debt do you want to pay off? You will have to decide what goals you want for yourself in the next five years. Come up with a goal that is possible to do with some work, but not so easy that you can do it without trying. You don't want to set impossible goals either, but make some goals which stretch yourself.

Now that you have a few goals in mind, you will need to establish a plan to meet those goals. Let's say one of your goals is to make $10,000 a year more than you do now. You can't just will this goal into happening; you have to make it happen. You have to find a way to be more valuable to your existing company, search for a new job, or start a part-time business. You have to figure out how you are going to achieve this goal, and when you do, write it down on paper. Establish baby steps that you want to achieve by a certain date so that you can ensure that your plan is progressing to meet that goal. Do this for each of your goals.