Today someone said to me, “There’s no way I can save enough to retire. How should I manage my finances to so I can live well today and still plan for tomorrow?” Awesome question!!! I think most people feel this way. They read what “experts” say they’ll need for retirement and realize, it’s a crap shoot. Sure, people want to retire, but they want to live well today, too.
Are you sick of being told you better plan for retirement?
Every personal finance article pounds the need to plan for retirement into us. People tell me that when they think about retirement they just feel scared, confused and stressed out. That’s understandable since according to the conventional approach, most people are screwed. No wonder people are sick of it.
A big problem with retirement planning is it asks people to think about and make decisions about the rest of their lives. Heck, I don’t know what I’m going to have for dinner much less what I want to be doing when I’m 65. So much can happen between now and then, most of which we have no control over.
People realize the future is unknowable. That’s one reason many ignore planning. They’ve seen loved ones die early or not be healthy enough to enjoy their retirement and say, “Not me. I’m going to enjoy life while I can.”
Obviously, not planning is not the answer. But Planning out your next 40 years isn’t either.
So how do you live well today, and still plan for retirement?
In answer to my friend’s question, I rattled off these 4 steps (which are essentially my planning process):
- Step 1- Establish 1-year, 3-year, and long-term priorities (dream about the long-term but don’t plan it out);
- Step 2 – Create free cash flow. Focus on improving your income (revenue) and controlling your lifestyle (overhead);
- Step 3 – Review your financial statement and deploy your current assets and free cash flow based on your stated objectives;
- Step 4 – Review and adjust as your life unfolds (review everything every six months).
I say stop focusing on planning for the long-term. Instead focus on being agile in your financial decision making. Like a small business, have long term goals but stay focused on your 1- and 3-year priorities. These are the priorities that most likely mean more to you. Keep these front of mind and focus on making all the small decisions that move you toward them. Do this, and you’ll be able to adjust as your situation or the world unfolds.
Want to Learn How?
Keep reading this blog and listen to my podcast. In 2015, I’ll be teaching you how to have the little conversations that matter so you can learn to live well today without sacrificing your tomorrow.