What to Think About When Beginning a Life Plan
It’s never to early to start developing a life plan. There is so much to think about starting in the here and now, and extending even beyond your death if you have a family. You have to consider everything from what you’re going to do with this week’s paycheck all the way up to what happens to your property after you pass away.
A common misconception among the younger generation is that they have all the time in the world – that things will fall into place and they’ll start focusing on the future once they’ve fully settled on their present. Starting a comprehensive life plan will not only make sure you prepare for the future but it might help you figure out exactly what you want to do in the now.
First Step: Take stock of your life and prioritize
For every person, different aspects of life are more important than others – and that’s ok. People are individuals. Your neighbor may want to save save save and retire early. You may want to spend your money in the now and travel. Your neighbor may want to have kids, and you may want to live child-free. You may care more about your career than anything else, while the next person might care most about leisure time with their family.
Choose what aspects of your life are the most important and prioritize. Context Coaching suggests a four-point system for drafting an initial life plan:
- Assessing where you are in life
- Identifying what is important to you
- Writing out a vision for who you want to be
- Creating specific action plans in place to carry out your vision.
If saving is important to you, figure out exactly how you want to save and write a plan for how you want to do it. Do you want to start small? Do you want to take risks in investments, or keep it safe? Do you want to save for a specific purpose, like your kids’ college?
However you choose to invest in your future, it’s important to remember than it’s a long process, not a short-term money grab.
“Success in investments is a marathon and not a sprint. Develop an investment strategy and stick with it no matter what the conditions in the market. Since 1926, a diversified portfolio of large capitalization stocks has earned, on average, 10 percent compounded annually. Corporate and government bonds have returned approximately 6 percent. Woody Allen said 80 percent of success is showing up. Success in the stock market is largely about showing up and sticking to a long term plan,” Robert R. Johnson, President and CEO of The American College of Financial Services, tells Forbes.
Take your time deciding what kind of investments are right for you, but when you finally decide, stick to it.
What types of financial investments are right for me?
Investments can be broken down into a handful of categories – long term vs. short term and low risk vs. higher risk. This is by no means comprehensive, but for a beginner it helps to think in tangibles.
When and how to invest your hard-earned money is one of the most stressful decisions one can make.
“The first question you need to ask yourself is, ‘When do I need to spend that money?'” Manisha Thakor, founder and CEO of MoneyZen Wealth Management, tells US News & World Report. “My rule of thumb is investing is something you do for the long run, which I would define as a minimum of five years and ideally 10-plus years. Once you are sure it’s long-term money, now you’re ready to really get into the nuts and bolts.”
The Investopedia has a wonderful walkthrough of investment types for beginners, and I suggest you start there. And remember, it’s ok to ask for professional help. It’s a big decision and there are people who specialize in this. They can’t plan your life for you – you have to know what you want going in. But they can help you manage your investments to achieve your goals, as long as you know what they are.