**Hello Friends! Today we have the pleasure of hearing from Nicholas at Financial Fanny Pack. He’s giving us some great questions to consider when we start thinking about the next 5 years of our lives.**
It’s so easy to get caught up with our day-to-day struggles that we sometimes forget to look to the future. Of course your current issues are important, but if you want to prevent at least a few problems a couple years down the line, it’s a good idea to start to tackle some now.
Doesn’t it seem worth it to set aside a couple hours a month to think about how to prepare yourself for the future? I’d say so.
Obviously we’re all in different stages of our lives and carry different goals, but if you’re a Millennial, here’s a few things that you’ll probably want to consider in your financial plan.
Tons of options here, and for most of us, moving back in with our parents is not one of them. We all need a place to live. Have you thought about where you’ll want to be living in five years?
Will you stay in the same place you’re living in now? Do you aspire to move to a big city for a fresh start? Maybe you’re looking to buy a house in order to settle down and start a family.
The unfortunate thing is, whatever you end up choosing, it will likely cost you some money.
An apartment in downtown Manhattan will run you $2,000 per month on the low end, and will likely carry one month’s rent as a deposit. So you’ll be dropping $4,000 before you even move in. Plus, you’ll (probably) need furniture. How are you going to get it there? All of these expenses pile up, so don’t wait until the last second to try and scrape together several thousand bucks.
Buying a house will probably take a big chunk of change as well. You’ll need anywhere from 3.5% to 20% for a down payment. Can you afford that right now?
Regardless of your choice, you’ll need to plan ahead.
Starting a Family
Kids ain’t cheap. We all know that. So why would you wait until the last second to prepare? Eight or nine months may seem like a long time, but if you or your spouse have to take several months off before and after each child is born, that will hurt your budget.
As I’ve mentioned, you’ll also need to think about housing. And new furniture. And diapers. And medical costs. And insurance. The list goes on and on.
Plus, you’ll be contributing less towards other goals, like retirement. Have you thought about that? Might be a good idea to plow a little extra away each month to prepare.
If you’re like a lot of millennials, chances are you have at least five figures of student debt. True, you might not need to have it paid off in the next five years, but with additional expenses like those listed above, will it still be easy to make the payments?
A few extra bucks here and there could really put a dent in your bills and make life easier in the future. This idea is much more proactive, but if you’re not trying to afford a kid or a new house right now, you could make things much easier down the line.
Your 5 Year Financial Plan – Planning for Your Future
Now, obviously this list isn’t comprehensive. We all have different objectives for the next five years. The point is that it’s important to plan for them now.
While you’re at it, it might be wise to think about the next ten years, twenty years, and so on. It’s never too early to get ready for the future.