A Little Plan is Better Than No Plan

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

My wife has a friend who is about 25 years old. She was recently talking (complaining) to her co-workers that she wasn’t happy – she wanted a new job, to find a new relationship – to essentially change her life around. My wife’s response was that she needed to do something rather than complain, because that really isn’t going to lead to any significant changes other than prolonging things she thinks are missing in her life.

For my wife and I, a goal of early retirement has solidified a lot of our financial and other plans. I finished school for an accounting designation to ensure that I would be more employable if I were to lose my job. My wife shifted away from retail work, which she enjoyed to make more money in an office setting. Additionally, by focusing on financial freedom, it gives perspective to some of our purchasing decisions as well as our longer-term goals.

A longer-term goal, like the one we have for early retirement allows for a comparison of what we currently want (say a 70 inch television) and how this would impact our longer term end-goals. For me, not having an end goal in my mid-20’s lead to what I would see now as wasted spending, as I could have been that many years closer to early retirement. I never got into consumer debt, or bought anything outrageous, I just spent everything I made, and really don’t have anything to show for those “lost years” now.

I think that everyone could use a long-term plan. I don’t necessarily think that early retirement is for everyone, but some form of financial independence from employment income would be worthwhile – for example, to cover “bare-bones” expenses on a monthly basis. Over a 10 or 12 year period, most people in Canada would probably be able to manage these basics using only their Tax Free Savings Account. I would think that having a smaller plan is better than having no plan at all, and doing what I did in my 20’s, which lead to financial instability and put me at risk of financial hardship due to a lack of savings or having a reasonable budget.

As for my wife’s friend, I’m not sure if this kind of long-term goal would be something she would be interested in doing. But to have something like this to work towards wouldn’t hurt, and may give some needed direction in other areas of work and life.

Do you have a long-term financial goals?  How many years out did is it, and how did you arrive at this goal?

2 thoughts on “A Little Plan is Better Than No Plan”

  1. Having and following a plan is a requirement to reach difficult goals.
    We had a goal to become financially independent within 5 years and reached it at age 30. Keeping our goal in mind allowed us to invest all of our disposable income instead of spending it. We were not too sure what we would do with this independence at the time but now we have a clear vision.
    Our goal for this year is for my husband to retire in order to care for our family. In addition, we will pay off our mortgage within 5 years so that I can retire then.

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