If you feel overwhelmed when people talk about their five-year plans, you probably aren’t sure what “life planning” is, let alone know how to go about doing it. Yet, creating a written life plan is one of the most important things you can do, regardless of your current situation in life. If you don’t have a life plan, you’re more likely to mismanage your finances, relationships, and career. In fact, it’s best to get on board with writing your life plan sooner, rather than later. These tips will help get even the greenest of novices on the right life planning path.
Rather than just trying to make it through the week, month, or year, define and write down your most important life priorities. Do you want to buy a house? Do you want to get married? Do you want to have children or adopt a pet? Do you want to pay off your mortgage before you’re 50? Do you want to retire to Florida by age 60? Do you want to pay for your children’s college tuition? The first step is to establish what’s most important to you and to make sure all your decisions then support your ultimate goals.
The trick to setting your priorities is to be realistic yet lofty enough not to set your expectations so low that you get caught in a self-fulfilling prophecy. It is reasonable to say, for example, that you want to have your home paid off by the time you are 50. It is reasonable to say that you want to retire comfortably by the time you are 65. Knowing your priorities helps you stay on track, align your actions with your priorities, and work with a financial planner, lawyer, and accountant to make your priorities become a reality.
Some people say that assessing your current situation in life should be the first step in creating a life plan. Honestly, our first and second life planning tips may be interchangeable and may have to occur simultaneously. Some people find that setting priorities has to come first because they need to know where they want to ultimately be in life before they can figure out how to get from now to then. Other people are of the opinion that a current life assessment needs to come first because it helps them create more realistic and clear priorities. Overall, you need to begin the life planning process in the way that is most logical for you; some people need to start with the big picture and others need to start with the present. No matter where you begin, you need to set clear priorities and honestly assess your present situation as two of the earliest stages of life planning.
As with any plan, you need to create a set of steps to accomplish the priorities you set. Determine which actions you need to take to achieve your priorities and write out what you need to do to make them happen. Some people find that writing action steps becomes easier when they look at the role they will play in each priority. For example, if part of your life plan is to buy a home, you might first research the costs associated with doing so. For example, find out whether it’s more cost effective in your area to buy a new home or to buy an older home that needs some remodeling. Or is there a particular area in your city where property values are growing? If part of your plan is to start your own business, action steps might include writing your business plan and/or applying for a small business loan. As you can see, these are both big, life-changing developments, but when you break them down into action steps they’ll feel much more achievable.
Life planning can be as simple or as complex as you want to make it. As a novice, you should keep your life planning process as simple as possible by following our three steps and looking to a lawyer and financial advisor to help you through assessing your current situation and setting your life priorities.