Sticking with a long-term financial plan in a world filled with instant gratification is essential for your financial and emotional health. As they say, slow and steady wins the race. We’ll explain precisely why and how to stay on track with your long-term financial plan.
Why You Should Have a Long-Term Financial Plan
A long-term financial plan helps ensure you are well-equipped to deal with what comes your way. Think of it as a “roadmap” to your finances. This roadmap should be a tool to achieve your goals and get what you want out of life.
We all know money isn’t everything, and it’s not important what amount we have in our accounts at the end of our life, but what we could do with it along the way. Your roadmap should help guide you no matter what life throws at you!
What Makes a Solid Long-Term Financial Plan
There are a few critical components to a long-term financial plan. For example, you’ll want to establish financial goals connected to your values. Don’t lose yourself in the numbers; remember what money can mean for you, where it can take you, and where it fits in with your life.
While you’re honing in on your value-based goals, you’ll also want to ensure they are SMART goals. As a reminder, SMART goals stand for goals that are:
- Realistic, and
Each concept is important because goals that lack them tend to get forgotten and are harder to stay accountable to.
To start formulating SMART goals, ask yourself questions like:
- How much do you need in your nest egg to live comfortably?
- What age do you want to retire by?
- Where do you want to invest your money moving forward?
- How much do you want to give to charities or causes you care about?
Specific questions like these will help you narrow down goals you can track and achieve.
What’s In the Plan?
An excellent long-term financial plan also involves thorough preparation for hiccups in the future. Your plan should include a debt management plan, a retirement plan, a budget and cash flow plan, emergency funds, and an estate plan.
We sometimes think of these things as circumstances that are far away or will never happen to us, but the truth is you never know when an emergency or life event will happen that will suddenly require such funds and planning.
This brings us back to the instant gratification pitfall. Getting into a sticky situation, such as an emergency or debt you didn’t expect, can cause you to make unwise financial decisions. This might look like pulling from accounts meant for other purposes to dig yourself out or spending more than your means.
We all want to feel safe and stable, including in our finances, but resorting to decisions for instant gratification can be detrimental in the long run to your financial portfolio. Saving and planning will allow for more comfort and ease in the future, so keep your eyes on the prize.
Your Values are the Backbone of Your Long-Term Plan
We mentioned that a successful financial plan aligns with your values. What do you dream about in your free time? You might want a lovely house for your grandkids or guests to stay in, travel the world with your partner, or simply not worry about money whenever you go out to dinner. We may prioritize different things during different seasons, but the heart of what we value is still consistent.
Getting specific about these values and what your money enables you to do will move the arrow on your compass toward where you want to be with your finances.
Not only when you’re planning but also when you’re making financial decisions, always consider how it aligns with your values. This helps to ensure that your financial decisions are serving you and providing you with fulfillment rather than filling an instant gratification.
Having a Healthy Relationship With Instant Gratification
“Keeping up with the Joneses” can be tempting, but rather than following what others are doing, take a second to consider if whatever it is aligns with your values. Because if it doesn’t, that can be a recipe for buyer’s remorse!
Now, it’s important to be realistic. For example, one-off scenarios, like a splurge at a favorite store or a pop-up ad for a sale, get us all occasionally. That’s why it’s crucial to have a healthy relationship with instant gratification; it’s okay to make purchases like that sometimes because eliminating them just isn’t realistic.
But, any more significant purchases or consistent purchases coming from a place of “instant gratification” rather than “how will this serve me and bring fulfillment to my life” should be stopped and considered. Ask yourself why you’re purchasing, if it’s mainly emotional, and if it’d be worthwhile in the long-term and not instant gratification.
How to Navigate Changes to Your Long-Term Financial Plan
An important thing to remember with any long-term plan is that they are subject to change. Staying flexible is a good mindset, not just in life but in finances as well.
For example, sometimes things just come up! You may have an unexpected medical expense or a child going through a divorce that you want to help. If it means something to you, it should cause a re-evaluation of your financial plan. But, even throughout the change, your values should still drive your long-term goals.
You’re probably thinking about where your own goals lie and what your customized financial plan would look like. We’re here to help you with that!
Contact us to work with one of our professionals, who would love to help you get your roadmap started.