Posted by Mary Caraccioli | Filed under Budget
The 5-Year Plan by Mary Caraccioli
Many businesses have 5 – 10 or 15 year plans. But very few individuals or families do these types of plans for themselves. I want to change that! I think they are so useful in so many ways. I have broken these benefits down to the 4 P’s.
Start with the 5-year plan. You make a list of all the things you expect will happen in the next 5 years, births, birthdays, vacations, graduations, career changes, raises, pay cuts, reunions, new cars, appliances, house maintenance, etc. Next, write down your current expenses.
Now all you have to do is plug in the years (see the document below to see how I did this for the Carolus family).
Writing down and then agreeing on what your family will fund for the next 5 years allows your family to prioritize. What matters to each of you? When I met with the Carolus family for my new show “We Owe What?” there was some debate between Tami and Ed as to where they wanted to put their money. This type of debate is great and so important. It is key here to listen to everyone invited to the discussion. When I say listen, I mean really listen- don’t just assume you know what they are going to say and shut down. Insist that you are granted the same courtesy.
Get the kids involved too! Tami and Ed were surprised to learn that their daughter Beth put volleyball over racecar driving. What you will get from the discussion is buy-in from the whole family. Everyone knows how and why decisions were made.
This allows you to plan. Will you need extra funds in 3 years to pay for that new roof? Do you want to retire earlier? Seeing exactly where you are financially the year you want to act on something is fabulous. You will see “yes I can afford it” or “I need to work a side job to make that happen” – either way you are empowered and determining your own destiny!
The plan allows you to see how you will pay for things. Do you have enough in savings, or should you cut something else out so you will have enough? Is this something you want to buy on credit- then how much of a burden will that add to the years ahead? You will see it all!
Finally, this is a place for you to dream to picture the type of future you want and then come up with the best plan to pay for it. I encourage families to picture their future – it makes the work we do today easier because we are reminded of why we are working so hard!