A Financial Tune Up

Recently, I decided that I needed to sit down and do an annual financial tune-up. Sure, I go through and manage my finances roughly one hour per week, but that's to evaluate my day-to-day and monthly financial situation. What I realized I needed to do was start looking at the bigger picture - beyond my monthly bills and my retirement funding. So, I did just that.

First, I sat down and worked out my next five years, or my Five Year Plan. This is where you decide what you want to achieve in the next five years and set a date for when you want to accomplish these goals. I wasn't sure where to start so I began by printing off a yearly calendar for the next five years. Then, I made a list of things I'd like to accomplish then inserted them in the calendars where they made the most sense to me. While most of these goals are financial in nature, some of them aren't.

Next in my financial tune-up was to calculate the numbers for the big financial items that need to be completed in the 10 years that remain before I retire. I plan to buy land, put a small, off-grid home on it, and have it paid off by the time I retire. But, what does that mean in numbers? How much do I want to pay for the land, the home, for how many years, and how much will that cost per month? These were all things I needed to work out.

I also needed to calculate how much my retirement investments would be worth by the time I retire so I know about how much money I can take from them each month. I also figured out my estimated social security so I have a good idea of what my monthly income will be in retirement. 

I admit, I felt a bit overwhelmed at first but I understood how important it was to do these things. It's hard to have goals, let alone reach them if you don't have a game plan for them. If you don't have that plan in place, it's easy for those goals to just become something that will happen in the future but never actually materialize.

Knowing what I want for my retirement helped me lay out my five-year plan. Obviously, for my finances to be where I want them in retirement means I need to know when certain things need to take place. Like how much and when I should have my down payment saved up; which in turn dictates when I need to find property; which in turn dictates when I need to move out of my current housing situation. It also gives me an end-point for when I should have it all paid off and how much I need to pay each month - and if I can afford to do so.

Doing this financial tune-up was eye-opening and made me feel accomplished. It gives me a sense of relief and excitement because now I know the whats and whens of my goals. I will definitely do this tune-up at least once a year so I can keep my plan on track, adjust anything, and add new goals as they pop up. Until then, I can rest easy.



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