How To Create a 5-Year Plan For Financial Success

5-year plan

Five years from today seems far away, doesn’t it? But the truth is, 5 years go by really quickly. Despite the rapid pace, you can completely change your world in that window by having and working on a 5-year plan.

In that time, you can go from being broke to having financial stability. You can rise from being saddled with debt to living a debt-free and happier life.

But you know what it takes? A plan. It won’t just happen by itself. It’s going to take a lot of hard work and dedication. Wondering how to make this work? Let’s dive in!

Why should you create a 5-year plan?

You know the saying when you aim at nothing you’ll hit it every time? It’s true for every aspect of your life - including your finances.

Creating a financial plan for the next 5 years does three things for you.

Firstly, it helps you to cast a vision for the changes you hope will take place in your life and gives you a map for how to actually get there.

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 do you think you’ll likely achieve? Definitely the latter. Even this Harvard Business School study supports the fact that people with specific goals have a higher chance of success.

Secondly, 5 years is not too short that you’re left with no time to make changes (e.g. get a new job, move to a new location) but it’s also not too long that it feels like you have eternity to achieve the goals (e.g. unlike thinking of saving for retirement).

Lastly, it will truly transform your mindset around finances and goals for the better. The truth is, for any meaningful change to take place, the changes have to first take place in your mind. Once your mind is changed, you’ll automatically be able to put a plan into action.

If you’re looking to jumpstart your money mindset, check out our course on how to transform your money mindset. You’ll be well set up for success!

How to create your 5-year plan

Now let’s get into the step by step of actually creating your 5-year plan.

1. Write down your goals

To get started, set aside some time with yourself to seriously think about concrete, tangible items that you want to implement for yourself over the next five years – not pie in the sky wishes, but things that will truly get you closer to the life you’ve always envisioned for yourself.

List these goals in order of priority – that way, you’ll get a better sense of what you will make the biggest impact for you in the coming years.

Stuck on where to start? Here are some prompts that can help.

  • If you have debt, how much is it today and when would you like to pay it off completely by?
  • What living situation do you see for yourself in 5 years? Is homeownership a goal? If yes, describe your dream home and which neighborhoods.
  • How much income are you looking to make five years from now? Will it all be from your job?
  • Any interest in starting a side hustle? How much additional income are you hoping to bring in?

As you go through your list, include a list of categories you would like to address such as:

If it seems impractical, write it down anyway! Your dreams should be bold and audacious because you really can achieve them!

2. Determine what your goals will cost

Some goals are free. Others, will no doubt come with a price tag. If you’re working towards a healthier lifestyle, take note of the cost of a gym or a change in diet. If you’re looking to start a business, what inputs will you need? Some businesses require no money to get started while others need careful financial planning.

Put an estimated budget next to each item together with the year you hope to achieve each by.

3. Get over your fears

If your goals don’t scare you, then you’re likely dreaming too small. Push past the discomfort and fear that comes with bold goals and you’ll have won half the battle.

Realize this – no one is immune from fear but what truly sets apart those who are successful, and the rest is that successful people feel fear and do it anyway.

The only way to really conquer fear is to face it head-on. And the first step to conquering financial fears is to cast a vision for what you see for yourself in the near future.

Cast the vision and chase it with all you got!

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

You’ve probably heard this saying before right – what gets measured gets managed.

You’ve written down your goals and are working towards them but if you’re not tracking your progress, you’ll never know how close or how far away you are from achieving them!

Mid-term goals likely need more than a few weeks to accomplish. Some could even take a couple of years. The best way to accomplish these?

Break them down into smaller chunks.

Saving for a $50,000 down payment on a home? Plan to save $10,000 each year towards that goal. But don’t just stop there, break the goals down further.

Ask yourself, how will I save $10,000 this year? Figure out a safe savings rate that you can reasonably pull off each month to hit that goal. Take it a step further and break it down into weekly goals.

The only way to move forward is one step at a time and breaking out these goals into weekly targets will help you achieve the little goals that will ultimately allow you to find success with the big goal!

5. Immerse yourself in things to help you succeed

The road to success isn’t always a straight line but one way to get it to be as straight as possible is to seek advice and focus on your self-improvement.

Now you might be saying to yourself “I have people who I would love to mentor me but there is no way that I will ever have access to them.”

You’re probably right. You might never be able to have one on one meetings with those people but that doesn’t mean you still can’t learn from them.

Huge fan of someone? Read the book. Listen to their podcast. Take one of their online courses. Nowadays, information is readily available at the touch of a button.

Education could be a great goal to include as part of your 5-year plan and you can slice it and dice it in many different ways such as reading one or two new books every month or listening to a podcast while going about your daily routine.

Immersing yourself in helpful material has never been easier! Not only does it give you a tactical approach to making positive changes in your life, but it also changes your mindset which is the starting point to living the life you desire.

While digital media is good, in-person interactions are equally important. Common wisdom has it that we are the average of the five people we hang out with most. Take time to seek out mentors who have walked the path you hope to walk on successfully and who are good examples of where you hope to see yourself five years from now.

6. Journal to reflect

Writing down your 5-year goals is a great first step, but what will really help you keep your momentum up is journaling.

Writing can be done in many different ways – you can choose to focus on what you’ve achieved so far, you can journal about the challenges you’re facing as you go, or, one of my favorites – you can journal as yourself 5-years from now having achieved all that you dreamed you would.

Going into the future looking back in can help you overcome some of the mental barriers, such as fear, that can make some dreams seem impossible. Journaling can help you to bridge that gap and get you closer to achieving your goals!

There’s a psychology around why we spend too much and don’t concern ourselves with tomorrow. Some will call it YOLO. Others feel that it's not worth dedicating so much time and effort to but those who have done it have zero regrets. In fact, many will tell you that their fortunes changed once they became intentional about their longer-term goals.

In closing

If you’re looking for additional resources to help you get started financially, check out our financial roadmap – an excellent tool to help you transform your money mindset and lay a strong foundation for success.

Remember, if you’re reading this and the new year has already passed, it’s never too late to start taking control of your financial future. Start today!

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