You’ve probably heard the question, “Where do you see yourself in five or 10 years?” at least once in your life. And if you’re like most of us, chances are, you didn’t have a well-thought-out answer about your plan.
If you had a chance to consider the question first, you arguably would have said something like, “In a place of financial security.” Or maybe you would have gone more specific: “Living debt-free”; “Owning my own home”; or “Traveling the world with my pet cat, Fido.”
But without a plan, these are just one-offs bordering on wishful thinking.
So, what does it mean to make a five- or 10
-year plan? That’s what we’re going to explore today – not just how to think about where you want to be but also how to get there.
What is a 5/10-Year Plan?
A five-year plan (or 10-year plan, or thirty-year plan) is essentially a list of goals broken down into attainable milestones. A roadmap to your own success, if you will.
The most comprehensive multi-year plans cover several factors, such as your career, relationship, and personal goals. But some plans are single-faceted, such as a financial plan that leaves plenty of wiggle room for the rest of your life to adapt with it.
Of course, no one knows where they’re actually going to be in five or 10 years. You may not even know where you want to be. And that’s okay! While knowing what you want to achieve helps you take concrete steps, it’s possible to set goals independent from your lifestyle or career choices and still succeed.
For instance, instead of deciding where you want to work in 10 years, you can go back to school and get your MBA. Thus, you’ve set your sights on a means to accomplish an end.
Or you can decide that you want to increase your income and do something you love – and inexplicably find that your passion for tiny clay animals rakes in $100k a year.
Whatever you decide, the important thing is making the decision, outlining your plan, and sticking to it. Otherwise, you may wake up in five years and find that all that time has passed you by, leaving your financial situation – and your life – unchanged.
Benefits of a 5/10-Year Plan
The most obvious benefit of a five-year plan is that it increases your likelihood of accomplishing your goals. After all, it’s difficult to meet goals that you haven’t taken steps toward, let alone written down!
Moreover, a five-year plan helps you:
- Clarify your priorities
- Identify areas of change
- Ensure your goals are measurable, desirable, and attainable
- Feel motivated as you meet your milestones head-on
- Track whether you’re on course – or even the right course
But just having a five-year plan doesn’t mean life won’t happen. The difference is that when it does, you’ll be better prepared to tackle new challenges with confidence.
Because at the end of the day, not having a plan is a reactive way to live – but putting a plan in place lets you be proactive in your future.
What Should Go Into a 5/10-Year Financial Plan?
Crafting a workable five-year plan involves planning, introspection, and the ability to predict your future (just a little). Depending on your goals, you may find that your five-year plan narrowly focuses on one aspect of your life or that it encompasses several facets of your future. Only you can decide what’s essential and what’s not.
But if you don’t know where to begin, we’ve thrown together some ideas to jumpstart the process:
- Financial Stability. Visualize your life in five years. Likely, you want to attain financial freedom – but how? Do you want to pursue a raise? Contribute more to your retirement and emergency accounts? Reduce your debt?
- Career. Your financial stability and career goals often go hand-in-hand. So, where do you want to be in five years – at the top of a big corporation? Running your own business? Turning your side hustles into passive income cash cows?
- Relationships. Consider those in your family, friend, and professional circles. Do you want to be more in less involved in anyone’s life? What about starting or joining a club or reducing your involvement in activities you no longer care about? Do you want to start dating or adopt a child?
- Health. Where do you want to be physically, mentally, and emotionally in five years? Do you want to lose weight? Gain weight? Get stronger? Eat better?
- Hobbies. All work and no play makes Jack a dull boy. Whether you want to get more involved in your church, take up knitting, or hit the ski slopes, knowing how you’ll spend your free time is just as important as recognizing your professional aspirations.
Specificity is Crucial to Success
It’s not enough to name a few goals and be on your way. Knowing that you want to grow your income, pursue a new career, or buy a house are all fantastic goals…and fantastically vague starting points.
It’s time to get specific.
Let’s take the first example: growing your income.
One way to do so would be the generate multiple streams of income. This may mean you need to get invested, start a side business, or buy rental properties. (Or all three!) Or you may decide to pursue a raise or job hunt for better opportunities elsewhere – which require entirely different milestones than opening your first investing account.
On the other hand, if becoming your own boss is your biggest goal, it might be time to go back to school, change careers, or gain the necessary tools and training before you hang up your own shingle.
And if buying a house is on your agenda, you’re much more likely to meet your goal if you plan to save $50,000 in the next five years, rather than putting your leftover change into a savings account every month after binging on Netflix and pizza.
Having specific goals will also help you with the next step: making your five-year plan.
How to Make a 5/10-Year Plan
There’s no one right way to make a 5-year plan. And if you’ve been following along, you’ve already started – deciding what you want in life is the first step.
After that, it’s a matter of writing down your goals, outlining how to bridge the gap between where you are and where you want to be, and taking necessary action.
For this process, we recommend that you use (gasp!) a real pencil and paper to make your plan. But if you prefer, a Word doc will do, too.
Step 1: Consider What You Want in Life
If you haven’t started yet, it’s time to decide what you want in life – at least generally. Consider what will make you feel happy, accomplished, and successful by your standards. (Hint: you may find it helpful to start by focusing on one or two specific categories, such as financial stability or your career.)
Decide which aspect(s) you want to focus on and write that at the top of your paper. (If you choose more than one, be sure to have a few spare pages lying around.) Then, divide your paper into two columns.
Step 2: Establish Your Goals
Next, it’s time to establish your goals. Do you want to pay off your debts or save up a deposit for your first home? Find a romantic partner or adopt a child? Pick up a new hobby or start volunteering?
Whatever you choose, make sure that your goals are:
- What you want in life
Then, pick a few of the most important goals and write those down on one side of the paper. On the other side, write out the skills, strengths, and experiences you already have that will help you reach your potential goals.
For instance, if you want to save up $50,000 for a down payment on a house, having a savings account with $2,000 already in it is a great start. Or, if you’re interested in starting your own business, note any degrees, training, and work experience that will aid you along.
Step 3: Do Some Research
After you know what you want to accomplish, it’s time to find out what you need to succeed. This may involve snooping around online, reading books by professionals in the field of interest, or speaking with friends, colleagues, or mentors.
Depending on your goal, it may be helpful to find out:
- Educational, skill, and experience requirements for your desired job
- How long it takes to gain the necessary skills
- What it costs to fund your degree or desired lifestyle
- Legal requirements to participate in an activity or hold a job
Step 4: Revise and Refine Your Goals
After you’ve completed your research, it’s time to go back to the drawing board (or document, as the case may be) and establish firm, attainable goals.
Perhaps saving up $50,000 in five years isn’t possible on your budget – but saving up $25,000 is.
Maybe starting your new business will take six years – but you can lay the groundwork over the next five.
Or you might find out that what you thought you wanted isn’t all it’s cracked up to be. In that case, it’s okay to change your goals!
Step 5: Outline Necessary Milestones
Armed with research and attainable goals in hand, it’s time to start breaking down your goals into specific milestones.
For example, let’s say you want to work your way up the corporate ladder toward a promotion and pay raise. In that case, your milestones might look like this:
- Year 1: Attain [certificate or training that enhances your employability]
- Year 2: Work on [upcoming major project]
- Year 3: Lead [future major project]
- Year 4: Promote to team lead and spearhead [potential future project]
- Year 5: Promote to [desired position]
You can also break down these annual goals further into monthly and quarterly milestones. For instance, if you’re going back to college, it’s important to know when you need to take certain classes or if on-the-job experience is required for your degree or future employment.
Itemizing your goals so that they’re achievable and not overwhelming makes it that much more likely you’ll succeed.
Step 6: Take Action
Once your plan is in place, the very last step is to follow through on it. Maybe you can’t get started today, or perhaps you can – but the longer you wait, the further out you’ll push your five-year plan.
And keep in mind that there’s no shame in deciding what you wanted when you were 23 isn’t what you want by the time you’re 25. A lot can change in a few short years, and that’s okay! Simply return to your five-year plan, revise for your new goals, and carry on your way.
You’ll get there – eventually.
Looking for a hands-free approach to investing? Download Q.ai and let AI manage your money with institutional-grade, AI-powered investment kits – totally commission-free.