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How to Create a Five-Year Financial Plan

Posted: 18 Apr 2024

2 mins to read

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Here are five steps you can follow to create your own five-year financial plan.

A five-year financial plan homes in on just one area: your money. Creating a financial five-year plan can help you gauge where you're at now, get clear on where you want to go, chart your course, and stay motivated to get there.

Here are five steps you can follow to create your own five-year financial plan.

Reflect on Your Finances

Before you set your sights toward the future, gauge how you feel about your current financial life. What are your financial successes made up off? Take a moment to jot down achievements you feel good about, such as paying off a loan or improving your credit.

Then, think widely about anything that isn't working. What challenges have you encountered recently, or what barriers stand in the way between you and the lifestyle you want?

Write Down Concrete Goals

One way to make sure you're creating targeted, productive goals is by using the SMART goal method, which stands for Specific, Measurable, Achievable, Realistic and Time-Based.

Set Milestones

Depending on your perspective, five years from now may seem like the distant future—or it may seem like not that much time at all. However you look at it, it's likely that focusing on five-year outcomes alone won't help you pinpoint what you need to do on a day-to-day basis to get there.

To make your five-year plan more actionable and help you track your progress, set frequent, regular milestones. One obvious way to break up your goals is by year. So, for example, if you want to save up a R10,000 emergency fund within five years, you could aim to stash away R2,000 a year. Breaking it down even further, you could aim to save R167 a month (which would put you just over your yearly goal).

Pivot As Needed
Five-year plans are a valuable tool because they help you fit your short-term goals into a larger picture, and they can be highly motivating. That said, life can be unpredictable. To stay on track, regularly review and adjust your plan, considering life's unpredictability. If circumstances change, don't hesitate to update your goals to stay aligned with your vision.

Recognize the limits of a DIY financial plan. If facing complex situations or long-term goals, consider consulting a professional for guidance. By following these steps and staying adaptable, your five-year financial plan can serve as a motivating and practical guide to achieving your financial objectives.