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6 Steps for a Long-Term Financial Plan You’re Totally Skipping

  January 5, 2018  |    #Tools

A long-term financial plan is more than chance

The French writer and poet Antoine Marie Jean-Baptiste Roger said, “A goal without a plan is a wish.” Regardless of not knowing who he was, he had a point. Without a plan, your financial goals are left to luck. Guarantee your financial success with these six steps for your long-term financial plan and this fully-functional budget here that we use.

Start your 360-financial plan today

A 360-financial planning breaks down into three buckets. They are a daily financial plan achieved day-to-day, a short-term financial plan achieved within three to five years and a long-term financial plan that takes five or more years to achieve. The daily financial plan supports the short-term financial plan that supports the long-term financial plan.

An analogy for creating your 360-financial plan is that of the bucket with rocks, pebbles, and sand. If you fill your bucket with all your sand, you can’t add pebbles or rocks. If you do the opposite and fill your bucket with rocks, and then pebbles and then sand, you can all three into the bucket. 

The rocks in this analogy represent your big or long-term financial goals, such as preparing for retirement. The pebbles represent smaller financial goals, such as qualifying for your full employer match. The sand represents the smallest, daily, goals like sticking with your day-to-day budget.

If you only focus on the sand, the weekend shopping and dinners out, you won’t have enough money for your bigger financial goals. Then, that fabulous vacation was nothing but a wish, and a mai tai on the couch isn’t as tasty as a mai tai on the beach.

So, let’s start your 360-financial plan with your long-term financial plan

1) Decide on your one to three biggest Q.U.E.E.R. goals

The first step in creating a long-term financial plan is deciding what you most want. What are your biggest hopes and dreams for your life? Only so many rocks can fit into your bucket without it breaking. Narrow your biggest goals down to the most important ones using our Hopes & Dreams exercise.  Once you’re clear on these goals, everything else will fall into place.

On our Queer Money™, Going Bigger by Setting Q.U.E.E.R. Goals, we talked about setting Q.U.E.E.R. goals instead of stupid ones. Kidding. No IQ is required. Q.U.E.E.R. stands for:

    • Quantifiable
    • Understandable
    • Executable
    • Exciting
    • Relevant

2) Understand why your Q.U.E.E.R.  goals are so important to you

Because your long-term financial plan will take five or more years to accomplish, there will be times and situations that challenge your commitment to these goals. A demotion or job loss could knock you off track. An unexpected illness or accident could slow your income for a period. If you understand your “why” – know your passion and drive – you’ll stick to your goals.

3) Create a budget

Budget is not a four-letter word. Many people think of a budget like a diet, and no one likes a diet. A budget is not like a diet “saying what you can’t do and that you can’t have that.” A budget is the roadmap of your long-term financial plan, and it tells you what you can do and when.

Putting your income and expenses down on paper or in Excel puts into dollar signs how you’ll achieve your long-term financial goals, the rocks. To continue with the food analogy, because I must be hungry, your budget is your menu.

Do worry about having to dive into Excel and create your own budget. We’ve done the hard work for you. Click here to download the same budget we use to manage our financial daily, short-term and long-term financial goals.

4) Open accounts for each of your financial goals

Once you know what and how many goals you have, open an account to start saving and investing for those goals. For retirement goals, a company-sponsored retirement account such as a 401(k), defined benefit plan or 403(b) with an Individual Retirement Account (IRA) or Roth IRA is ideal.

For non-retirement goals, open a separate account. Set up automatic payments into these accounts for a specific dollar amount through direct deposit or recurring Electronic Funds Transfer (EFT). By automating these contributions, you’ll eliminate your regular involvement and the risk of missing or skipping a payment.

We talked about automating your emergency savings on this Queer Money™ episode

5) Socialize your long-term financial plan and goals

Share your long-term financial plan and goals with a friend, colleague or family member. Making your goals public makes you accountable and finds you an accountability partner. This helps ensure your financial success.

Your accountability partner will ask you about your goals and plans, which will help make them clearer to you. They’ll ask you for updates and, of course, you’ll want to share successes rather than failures. This will motivate you to success.

If you want a more formal way to engage your accountability partner with your long-term financial plan and goals, we created our Commitment Contract that both you and your accountability partner can sign.

6) Monitor your monthly and quarterly success, and tack accordingly

Being successful with your long-term financial plan will require constant engagement from you. Many obstacles and opportunities will come up over the next five-plus years, and you’ll want and need to adjust your budget. If you get a raise or promotion, you’ll have more money that, if allocated correctly, can help you achieve your long-term financial goals sooner. Unexpected expenses could arise, and you’ll need to adjust your budget to meet both your immediate needs and long-term goals.

Complete these six steps for your long-term financial plan and you’ll be better prepared than 40% of queer people and one-third of the general population.

If these six steps for your long-term financial plan inspired you and you forgot to download our budget above, simply click here to download it now.

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