The dawn of the new year always brings with it resolutions, goals and plans.
Most people will review the previous year and reflect on what they would like to improve on for the year ahead.
This is great because we should always try to be better than yesterday, last week and last year but from a financial point of view, planning for a year only will generally result in a plan for a series of transactions.
To what end?
Sure, we need to map out what the year ahead looks like but the best financial plans are based on a much longer term.
The best outcomes are achieved by adopting a 10-year time frame and always ‘being with the end in mind’.
Beginning with the end in mind is imagining the situation you would like to find yourself in at the completion of the period.
Often, clients will say ‘I would like to retire in 10 years’. From there it is a process of mapping out what this looks like, not only from a financial perspective but from an overall lifestyle perspective.
Many people do not really know what this will look like so it is helpful to ask questions such as:
- What does your ideal lifestyle look like in retirement? Where will you live? Will you travel? Will you help your children/grandchildren financially, otherwise? What will you do with your time?
- What level of income will you need to fund this lifestyle?
- What type of financial legacy would you like to leave, if any?
Once we have established what the end goal is we can start to identify what is required to take us from where we are now to where we want to be.
A 10-year plan should be on everyone’s to-do list, not just retirees.
