How to make a long term financial plan

Timeline planning, where you set goals and plans covering a specified future period, is a useful way to track your financial progress. Lewis Walker, financial planner and investment strategist at Capital Insight Group in Peachtree Corners, Georgia, uses eight years, when we would be almost at the end of the decade. Here’s how a great financial advisor maps it all out.

Larry Light: Eight years doesn’t seem like a long time, but I guess it really is.

Lewis Walker: My granddaughter, who not so long ago was in kindergarten with aspirations “to be a princess, and that’s it,” is a charming and savvy freshman currently interested by veterinary medicine. In just over two years, she will focus intensely on where to apply to college, and select the majors and extracurricular activities best suited to her envisioned future and unique abilities. In eight short years, she will graduate from college. Parents and students are still pondering the financial ramifications now.

Recognizing how quickly a theoretical future can land in your lap, one realizes how sobering the concept of time planning can be. In less than two presidential terms, today’s 14-year-old will turn 22, impacted by the state of the economy and labor market at the time.

Light: What are the considerations to take into account?

Walker: How old will you be in eight years? If you just got married or will be getting married soon, will you have bought your first home by then? What is your plan for accumulating the capital to buy and furnish your home? Per Re/Max, over the past year, home prices in Metro Atlanta, where I live, have jumped 9.6% on average. For many people, home equity is a major component of net worth and a source of emergency borrowing power.

How does rooting fit into your job and career prospects? Are you on the same wavelength as your spouse or partner? Will you have founded your family? How many children could you have by 2029?

Light: What about building assets?

Walker: How do you build your nest egg, which I call a financial freedom fund? Be debt free except for your mortgage? A Freedom Fund is set aside at least one year of living expenses in a secure money market fund, providing peace of mind and flexibility in case of an emergency or interruption of employment income.

Light: But along the way, people have to go into debt to do things like buy a house.

Walker: Ordinary consumer debt is outrageously expensive. Carrying rolling balances on credit cards is akin to being a caged gerbil on a wheel, getting nowhere fast. Eight years from now, do you want to be behind financial and goal achievement goals, or be ahead of the game?

Light: Tell us about the actual planning process.

Walker: As you begin your journey to financial stability, being dogged by goals can be frustrating. Instead, consider financial goals: what you need to live on, what you can put aside for your future expenses, save for retirement, etc. You may have goals related to education, career development, targeted investments, and pleasures such as travel and adventure.

Light: And capricious fortune can throw everything in the trash.

Walker: No one’s goal is to get into a disastrous car crash or other accident that could result in interrupted income, disability, death, or even a ruinous lawsuit. No one plans to divorce or break up a relationship in disagreement. No goal is to be widowed or widowed early in life. Entrepreneurs don’t plan for failure.

But things are happening. Work with a financial advisor on contingency planning, including legal, insurance and liability issues. If you own a business, what is your succession plan, planned or unplanned? You will retire at some point, voluntarily or involuntarily. How can changing tax laws affect collection decisions?

Light: And the following years?

Walker: If you’re 54, in eight years under current law, you can apply for Social Security at age 62, or you can wait until age 70. In 10 years, you’ll be thinking about enrolling in Medicare at age 65, unless you qualify because of your disability. There is talk of Medicare for All, but no matter what, you and those you care for continue to seek quality medical services and good health.

Aging parents and other loved ones will be eight years older by 2029. What might you encounter in terms of obligations to parents, grandparents, time, money, life management distance and emotional support? Elder care planning is a complex exercise. Are loved ones with special needs, children or adults, a concern?

Will you manage your transition to retirement or will it manage you? What is your vision of an active retirement? When you don’t show up to work on Monday morning with a tough week ahead of you, how are you going to maintain your physical and mental energy, your sense of purpose, your passion, and your purpose? If you’ve been observing aging loved ones or friends, how will you handle unexpected events that will eventually short-circuit your vision?

Light: Tomorrow always arrives faster than we think.

Walker: Eight years… 416 weeks… 2,922 days. It seems like a long time, but it’s not. You made resolutions eight years ago in January 2013. How does it work? Seth Godin, in his classic book, “Purple Cow”, urged, “Transform your business by being remarkable.” Starting today, transform your life and your career by being remarkable. Brown cows, black and white cows, quite ordinary. But, says Godin, “If you saw a purple cow, you would say, ‘Remarkable! » » Make your next eight years remarkable.