Making a Five-Year Plan

Making a Five-Year Plan Thinking ahead is one of the most important financial skills. There’s a lot to consider as you craft a plan for your future, and we recommend that you look ahead at a five-year timeline. In this podcast, we talk about the most important financial elements to consider as you move forward.

Making a Five-Year Plan: When you are planning ahead, five years is a good timeline.

Transcript

Welcome to another edition of our CredAbility [now ClearPoint Credit Counseling Solutions] Podcast. Along with your host Mechel Glass, here’s Steve Moore with a look at making a five-year plan and, more importantly, how and why you need to do it. Steve: Mechel, define for me what you mean by a five-year plan and then tell me who really needs one. Mechel: Well, a five-year plan is a plan based on your financial future. Not only does it take in account your goals and objectives, but it associates an approximate cost for reaching those goals and objectives. Steve: Okay. And then who needs a five-year plan? At what point do I establish one?
Mechel: Well, every adult should have a five-year plan. It doesn’t matter what age you are or where you are in life. Everyone should have a five-year plan that takes into account where they want to be in the future. Steve: Okay. Now if I’m married, it seems to me that could complicate matters, because now two people with different personalities may have different goals. Mechel: That’s true. And that’s why it’s critical for couples who are married or thinking about getting married to sit down and talk about what their goals and dreams are for the future. And their five-year plan should not be very far apart from each other. Hopefully, they’ve worked together on their plans, and they both can work together to reach those goals for the future. Steve: All right. Well, how do we begin? What are some steps we have to go though to come up with a five-year plan?
Mechel: Well, the steps are to write down what your goals are, make them specific, make them measurable, and then divide them between short-term, medium-term, and long-range goals. Steve: And can you give me an example of each of those?
Mechel: Sure. Short-term goals are things that you want to accomplish within a few months or maybe a few weeks. An example of that would be, let’s say, you want to improve your education by taking a community course online. And the course is about to start in a couple of weeks. So you register for that course. You take the course within a six-week period. After that six weeks, it’s over with. So that would be an example of something that can happen within a short-term period. A long-term goal is something that will take you years to accomplish. Let’s say that you want to go back to school to get a four-year degree. That’s something that you would want to put down as a long-term goal. Medium-term goals are things that occur maybe a year or a two-year period. That could be something like maybe you want to buy a new home. And you need to save up for the down payment. You need to do your research. It will take you some time to get that accomplished. So that would be something that would categorize as a medium-term goal. Steve: All right. Are there things that can get you off-track?
Mechel: Definitely. There are several things that could get you off-track. For example, let’s say that you make the list but you don’t follow it. That will take you off-track. Or maybe your spending is taking you further and further away from your goals. So if you’re spending on things that are not necessities, that will definitely take you away from your goals. Steve: Is it okay to change that five-year plan? Let’s say I get three years into it, and things just look different. Mechel: Absolutely. As we know, life changes. Situations occur. Maybe you get married. Maybe you get divorced. You have children come into your life. Those are significant changes that will affect your long-term goal. So it’s important to look at those goals to make sure they apply to you and that they still make sense for what you want in the future. Steve: Okay. Now, Mechel, I know we must have some resources to help with this. Mechel: Absolutely. We have listen on demand classes. They’re available 24 hours a day, 7 days a week on our website. Now, we actually have a class called “Where Do I Want To Be in Five Years?”
Steve: Great. Mechel, thanks. Mechel: Thank you.