How to create a 50-year financial plan

Written by Money Empire

January 23, 2020

Financial security feels amazing. It means more freedom, a nice place to live, the ability to help your children later in life and the end to stress about bills and unexpected costs. 

We believe this is obtainable for every New Zealander – but not without planning. To get you started on the right track, here’s everything you need to know about creating a 50-year financial plan

Take stock of where you are right now

Before you can plan a route ahead you need to know where you are financially right now. Add up all your debts and record them, making a note of any debt that’s high interest, risky or overdue as paying these off should be one of your first goals. Next, add up all your assets (property, cars, savings accounts, shares etc) and record them. 

Subtract your debts from your assets and you’ve got your total net worth. How’s it looking? 

Set short-, mid- and long-term goals (don’t forget retirement)

Now that you know where you are, it’s time to plan where you’re going. If you’re young you should ask yourself  – what kind of life do I want to be living in 50 years time? 

For example, you might want to have a mortgage free property and $1 million in assets to set yourself up for retirement. You might be even more ambitious and want $50,000 in passive income annually too. This is your long term goal – where you’ll eventually be if you create a realistic 50-year plan and execute it. 

Your short-term goals may include taking a holiday every year, while mid-term could be something like buying a new car or paying off your student loan.

Break your goals into paydays

Your next step is to take each goal and break it up into smaller, more manageable mini-goals. 

For example, your first short-term goal may be to become debt-free. Let’s say you’ve got $5,000 in credit card debt and $1,000 to spare each payday after expenses if you scrimp and save. Set up an automatic payment to transfer that $1,000 onto your credit card on pay day and you’ll have it paid off within five paydays. 

If you want to buy a home, you should apply the exact same practice to get it done. Figure out how much you need for a deposit and expenses, and how much you can put aside each payday to get there. 

In the meantime, you should make sure that you’re on track to achieve your long term goals as well. Apply the exact same process to that goal and you’ll know how much you need to grow your wealth in order to make it happen. Once you know, you can be set about figuring out how to make it happen. 

Grow your money to reach your goals

The above strategy sounds simple, but we all know it’s not. Saving and putting money aside can be impossible, especially if you barely have enough to cover your expenses. 

That’s why you need to be thinking about investing, and how it could help you grow your money. This might include property investment, buying shares or even investing in a business. 

When you invest smartly, all of a sudden you’re not the only one earning an income – your money is working for you too. And the more money you invest, the more it could make. 

This is a super-simplified version of a 50-year financial plan. To figure it out down to the dollar and make sure it works, we need to know your financial circumstances and goals. If you’re keen to set yourself up for the future, give us a call or drop in to see us so that we can get to know you and kickstart that 50-year plan. 

You may also like…

New Year – New You

New Year – New You

Now’s the ideal time to get your financial house in order! It’s been a tough year but it’s almost over and it’s...

read more