When we’re younger, our priorities are more often short-term. To start with, we’re usually paid at a lower rate, so our resources are much more limited. We take care of the immediate priorities; taking care of ourselves, perhaps taking care of a young family, paying off schooling debts, and so on.
This starts to change when you start to reach your 30s and 40s… That’s when we see a lot of clients coming in and wanting to prepare for their future. They’re at the point where they’re professionally established, and now they’re starting to look further down the line and plan long-term, for things like putting money aside for their children’s colleges funds, buying their forever home or planning for retirement.
But life is unpredictable, and we’re all very aware right now, how much can change over the course of 6 months. You never know what outside forces are going to impact your life, and so planning for something 20 years down the line can be hard to envision and execute. It’s so far away that it’s easy to get caught up in the thinking that there’s plenty of time to take action, which can cause people to procrastinate even when they know they shouldn’t be. Or even worse, lose focus entirely. That’s why, taking all those long-term goals into account, we generally try to build a solid 10-year plan with our clients first.
With a 10-year plan in place, it’s enough time to make sustained and meaningful progress towards your long-term goals, while still feeling immediate enough that it’s a priority. We start by setting up financial targets and milestones for clients to hit over their 10-year plan. That way there’s tangible proof of progress as we go on their wealth journey with Catalyst. Clients can see where their financial decisions today will take them over the 10 year period and they get to see when they will hit their targets along the way. These milestones are going to vary depending on what your income and your goals are. We try to make sure during the planning process that these goals are realistic, measurable, and achievable.
That’s not to say we discount working towards long term financial freedom goals or goals that don’t seem achievable right now based on a clients current financial position, on the contrary. It can be very helpful to know exactly where you want to end up in the end, because that gives us a frame of reference to work towards. But for a client to achieve the outcome they want to get in 15 or 20 years, what they need to have are really solid one, two, five, and ten-year periods financially in order to achieve those goals.
That’s because having a 10-year plan in place will help give clarity and focus around where you need to be with your finances to achieve your big picture goals. Having a clearly planned out path forward is also a good way to ensure you make the right financial choices to get you to your goals. You know all of the steps and can see them all clearly, if it isn’t a part of your plan then chances are it isn’t going to help you reach your goals!
But that doesn’t mean it should be rigid either, your plan needs to be flexible too. Your finances and circumstances can sometimes change quickly (like during covid), and you need to be comfortable changing that plan to reflect your new reality and possibly your obstacles towards achieving your goals.
Having a plan in place will especially help you through some of the rougher times. The pandemic has been an excellent example of this. A lot of places have been in and out of lockdowns since early 2020, and that has meant that a lot of people’s earning potentials were severely affected. For some people, having a plan like this in place also meant that they had prepared themselves and put aside money for emergencies that others may not have.
Even more than that though, when going through times of turmoil it can give clients comfort to know that, even if they have to make minor adjustments, they’re continuing to focus on progress and continually taking the small financial steps they need to take in order to achieve their goals.
Ryan Porter is a Wealth Coach at Catalyst Wealth Group. His mission is to help his clients achieve financial success and live their ideal life.
Any advice or information in this publication is of a general nature only and has not taken into account your personal circumstances, needs or objectives. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.