Creating a five year financial plan is a great way to map out your future and plan your life accordingly. We might not be able to look into a crystal ball to see how our lives play out 20 years or more down the line, but we can usually get a clear idea of what our fiscal future will look like in the next five years by drafting a simple plan. A five year plan will also help you set certain goals and help you meet them. Perhaps you would like to start a family and you want to know if you will be able to afford things, like a new house and all the other costs that go along with having kids.
Here are some ways you can create a 5 year financial plan:
For one, you want to know exactly how much money you make in a certain year, after taxes. You also want to add up all your regular expenses and forecasted expenses to give yourself a little bit of a cushion. By doing this you will get an accurate reading of how much money you will be able to save in a year. This way you can add up the savings for all five years to get a macro perspective of your savings, after taxes and after all your expenses.