Health, wealth and happiness. We all want it and most of us think we can have it as long as we work hard enough. But what if achieving the good life is more than just the right degree, long hours at the office and strategic networking through our early career?
The reality for most new graduates is that a full-time income won’t deliver the Kardashian cash we had in our starry undergrad eyes. Not for the first few years, anyway. The career and lifestyle goal you used to get you through that degree may still be a few years away, yet after three, four, five or more years of living like a cash-strapped student, it’s hard not to let loose and start living like we just won the lotto.
A study by Lifespan psychology reports that our twenties and thirties are spent in pursuit of knowledge, experiences and things whereas, in older adulthood, our focus shifts to maintaining and protecting our assets and accomplishments.
Of course, this makes sense, but if we don’t goal-set beyond the next holiday or career move when we are young, we may find ourselves still actively pursuing the firm foundations of education, secure housing and health care when we are older and less able.
Will this matter in five, ten or twenty years?
Generally speaking, we all have an idea of how we want our life to play out. Write your goals down, but have three columns – five, ten and twenty years.
Your five-year goals are the ones you need to allocate funds and energy to now. In five years, you may want to have saved the deposit for a house, paid off your student debt or started a family. Work out what it is going to cost you, divide it by the number of pay cycles you will have over the next five years and start putting that money aside in a savings account every pay.
Can’t afford to meet your five-year goal and live your current lifestyle? You’ll have to look at your priorities. Robert Kiyosaki has some powerful advice on this: Pay yourself first. That doesn’t mean that you don’t pay your bills until you’ve had a holiday, though. It means that you need to include money for yourself so you don’t feel deprived (and then go on a spending spree).
Review your progress towards your five-year plan regularly. If you’re on track and can afford to do more, maybe you can achieve it faster? If not, maybe you can scale down to achieve something smaller in the same time frame?
Your ten-year and twenty-year goals can be a little less concrete, but they might include things such as paying off your first mortgage, achieving a career goal, buying an investment property or putting your children in a private school. These are the dots on the horizon that you need to stay oriented towards, but they may evolve over time. Ask yourself often if you are moving towards these goals and whether they are still relevant.
My Income Organiser