Five years from now seems far away, doesn’t it? But the fact is that 5 years pass in the blink of an eye. You can make a positive difference in the world in that time frame by planning ahead with a 5-year budget and taking action to achieve your goals.

You can go from financial ruin to financial security during that time. You can go from being burdened with debt to live a debt-free and happier life.

But you know what it is like? It requires a plan. It will not just materialize by itself. It takes a lot of hard work and dedication to create a 5-year plan. What should we make of a five-year plan? Let’s dive right in!

Why should you create a 5-year financial plan?

Aiming for nothing and hitting it every time is true in every aspect of life, including finances. Creating a budget for the next 5 years helps you do three things. Furthermore, it can help you to visualize the changes you want in your life and provides a roadmap on the best way to reach them.

When writing down your financial plan, if you simply say “Buy a house in the future,” that does not carry the same impact as “Save $50K for the down payment for my new house in 2.5 years.”

Which one do you prefer? Obviously, the latter. Even the Harvard Business School study found that people with specific goals are more likely to succeed.

Second, five years is not too short that you are left with no time to change things (e.g., get a new job, move to a new location), but it’s also not too much time to feel as though you have eternity to accomplish your goals (e.g., unlike trying to save money for retirement).

Finally, your viewpoint on finances and goals will change for the better. In reality, for any substantive change to take place, these changes must first occur in your mind. Once you change your mindset, you will be able to immediately begin implementing a new plan.

If you are looking to jump-start your financial outlook, consider our course on how to manage your funds. You’ll be well-prepared for financial success!

How to create your 5-year financial plan

So, now let’s take a look at the step-by-step of how to design a 5-year plan.

1. Write down your goals

To get started, set aside some time with yourself to focus on practical, concrete goals that you wish to attain within the next five years — not pie-in-the-sky wishes, but things that will really get you closer to the life you always wanted.

These objectives are ranked according to importance – that way; you’ll be able to get a better sense of what will have the greatest impact on your well-being in the future.

Where do I begin? These suggestions should help.

As you work down your list, include a list of topics you would like to discuss, such as:

It is unfortunate that it is so unattainable. You should set lofty goals and achieve them! You can also use our free worksheets to create your own 5-year financial forecast. Try out a number of free 5-year financial forecast templates or create one of your own in Google Sheets or Excel.

2. Determine what your goals will cost

Some tasks are free of charge, while others might require a payment. When trying to improve your health, it’s vital to consider the costs of a gym or a change in diet.

What resources do you need to begin the process of a business enterprise? Some businesses do not have enough money to invest in startup costs, whereas other businesses need to carefully budget their spending. Estimate how much cash you’ll need to start each item along with a projected timeline to achieve it.

3. Get over your fears

If your objectives aren’t too frightening, you’re most likely dreaming too small. Instead of dwelling on your fears, you should push through the discomfort and fear that come as a result of making bold goals. You’ll have succeeded halfway when you accomplish these objectives.

Recognize this — No one is immune to fear, but what makes successful people successful is how they respond to it. What makes them different is that successful individuals respond courageously to their fears.

The only way to truly conquer fear is to face it directly. The first step in conquering financial fears is to cast a vision for what you will see for yourself in the future. Visualize your goal and chase it with every bit of energy you have!

Create a 5-Year Plan For Financial Success
Create a 5-Year Plan For Financial Success

4. Track your progress as you work towards your 5-year financial plan

You’ve probably heard that saying before, right – what gets measured gets managed. You’re working hard towards achieving your targets, but if you’re not keeping track of your progress, you’ll never know how close or far you are from achieving them!

Short-term goals might take months or even years to complete. Some goals never come to fruition. The best way to complete these? Break them down into smaller chunks within your annual goals.

Saving for a $50,000 down payment on a house? Plan to save $10,000 per year toward that goal. But don’t stop there; break your goals down even further. What if you could save $10,000 this year? Find a safe savings rate that you can reasonably achieve each month to reach that goal. Break it down further by setting weekly milestones.

The only path forward is one step at a time, and breaking these larger goals down into weekly targets will help you succeed with the smaller objectives that will ultimately lead to your ultimate success.

5. Immerse yourself in things to help you succeed

The path to success isn’t always a straight line, but one way to make it as straight as possible is to seek advice and focus on your own improvement.

You may be right, but you will have difficulty meeting them in person. You can still learn from them, however. Are you a fan of someone? Read the book and listen to their podcast. Offer one of their online courses to one of their patients. Today, information is available at the touch of a button.

Education could be a great option to include in your 5-year budget, and it can be cut, diced, and sliced in a variety of ways, such as reading one or two new paperback books per month or listening to a radio broadcast as you make your way through your day.

Now you can enjoy the lifestyle you want to live by immersing yourself in helpful content. Not only does this improve your motivation, but it is also the first step towards living a better life.

While digital media is convenient, in-person interactions are just as important. It is believed that we are the average of the five people we spend the most time with. Look for people who have taken the same path you wish to walk and who are excellent examples of the sort of person you hope to become in 5 years’ time.

6. Journal to reflect

Breaking down your 5-year objectives is a great way to keep your motivation up, but if you really want to stay on track, it is much healthier to record your writing process. It is often possible to write in lots of different ways, such as by hand, on a computer, or with a pen and paper. You can focus on what you’ve accomplished so far; you can journal the obstacles you’re facing as you progress, or, one of my favorites – you can journal as yourself 5 years from now, having achieved everything you desired to.

You can overcome many mental barriers by looking forward to the future and looking back at how far you’ve come. Journaling can help you cross this bridge and get closer to achieving your goals. There’s a psychological reason why we waste money today and do not worry about the future.

Some call it YOLO. Others feel that it is not worth devoting so much time to, but those who have made the effort have no complaints. Many say that their fortunes changed once they became serious about their long-term goals.

5-Year plan example

Here is a 5-year plan example to help you see what your proposed plan may look like. Remember, these goals are intended to be met over a 5-year period, but the sooner you pay off debt and start saving, the better your long-term prognosis will be!

Increase your income each year

To get started on your five-year plan, you will need more money. More money will allow you to bulk up your savings and pay off debt faster.

It pays to make a plan to increase your income each year. This could be from including annual bonuses and salary increases in your aim. However, this will depend on how your company’s business is doing and whether or not you meet your performance goals.

You can also find ways to make more money, such as starting a side-hustle, getting a promotion, or finding a part-time job. Some side-hustles may earn up to $20 per hour! That’s a lot of cash that could help you achieve your goals.

Fully fund an emergency account

An emergency fund is one of the most important parts of a financial plan. This money is tucked away for unexpected events such as a job loss or an unforeseen auto repair.

The ideal amount to have in your emergency savings is 3 to 6 months of basic living expenses. If that seems unattainable in a year, start by saving $1,000 and work your way up from there.

You can make a yearly of whatever you want to afford for emergency expenses every year for the next 5 years. Take that and break it down into how much you want to set aside each month.

If you have to spend money for emergency expenses, that’s what they’re there for. Plan on replenishing your account once the emergency is taken care of.

Pay off credit card debt

If your credit balances are on the credit card, your goal after creating an emergency fund should be to eliminate all credits. High-interest credit cards will bury your savings quickly, so it is essential to eliminate them as soon as possible.

You can pay off your 5-year debt over a period of 5 years if you are unable to do so sooner. Determine how much you would need to pay monthly and calculate it by dividing it by 12. Use the debt snowball method to save more money.

Pay off your cards in the smallest to largest order. Apply any leftover funds to your minimum amount, and repeat the process until all of your cards have been paid.

Start paying off other loans

This may take up the rest of your five-year budget but do your best to pay off the remainder of your loans, including auto loans, student loans, and any other secured or unsecured debt you may have.

If you are not able to fully pay them off, do your best to pay as much of the balance as possible, thereby reducing your interest over time. Break down your monthly payments for your 5-year plan so you can budget appropriately.

Grow your money by investing

Wealthy people obtain their money and investments to work for you. So investing should be part of your 5-year financial plan. The good news is you don’t need a lot of money to get started.

You should also diversify your portfolio by investing in different types of assets-such as stocks, bonds, and other kinds of investments. The sooner you get started, the better off your retirement savings will be.

Here is a five- year plan example that you can use to create your own plan.

Create a 5-year plan for financial success!

So, you now have the knowledge necessary to create a 5-year plan for your budget. Be sure to utilize a 5-year budget template or create your own to visualize your goals.

For additional resources to help you get ahead financially, check out our free financial roadmap on Patreon. It provides an excellent method of setting a solid financial foundation and achieving financial success.


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