Future planning – what does yours look like? FIRE

What do you want your future to look like?

I posted about retirement the other day, I’ve shared how to be a millionaire as a single mum and have sometimes touched on FIRE (Financial Independence Retire Early). Have you truly thought about what you want your future to look like, not just retirement but between now and then?

Your future is more than retirement

When I talk about the future with clients, they typically think retirement or ‘one day’. It’s rare there are any definite plans for what they want. Your future isn’t simply about your retirement, as important as it is to plan for, your future includes all the time between now and then. What do you want in your life and how will you make it happen? Clearing debt by a certain date, buying a house, having a baby, these are all common goals. Determine what you want in your life now, as well as your retirement years. Do you want to retire at the normal age or do you want your own life sooner? Sit down and create a plan to make your life what you want it to be! I share mine further down.

What is FIRE?

FIRE is Financial Independence Retire Early. It’s a ‘movement’ which has gained a lot of attention over the years. The exact definition varies a little from person to person as our lives and retirement are personal. For some, it simply means having the financial resources to be financially free and stop their job but continue to do other projects or a business they like. Others view it as stopping work completely and never doing anything considered work the rest of their lives.

For me, FIRE is about having options. Financial Independence is the crucial part of it. Having enough money coming in to cover all my expenses and then some. Investments which continue to grow and provide income. Multiple streams of income. This is financial independence to me. Having that gives me the freedom to choose to retire completely if I wish, or choose to do whatever work I want to do. I am not locked into anything and not working in a job because I have to but instead because I want to.

When do you want to retire and how?

Working out when you can retire requires you to know how much your expenses are plus what income you have. Relying solely on superannuation is quite different from having shares, investment properties and/or a business. The amount you would need in super would be higher but it is about your own retirement and how you want to do it so if that is what you want to do, go for it.

When thinking about it, use resources like this to help you work it out. Think about when you’d like to retire, what lifestyle you want, expenses you will have (remembering with age, health usually becomes quite expensive, but you may have paid off your home).

Ideally, work some of it out yourself, then speak with a financial advisor to find the right way to manage your finances and plan your future. Get recommendations from people who are doing well financially to know who to trust to get that advice from. Alternatively, do it yourself with books such as The Barefoot Investor or Dave Ramsey’s Total Money Makeover.

Questions to ask yourself

It can be hard to plan when you don’t even know where to start. To help you, here are a few questions you might want to ask yourself.

1. What is my net worth?

Planning for the future is a little tricky if you don’t know what you’re starting with. Read this post to work out your net worth. It is essentially your assets minus your liabilities. Knowing this will give you a base to work from.

2. What are my expenses and what will my future expenses be?

Knowing how much you need to live helps you work out how much you need saved or invested and providing an income to allow you to retire.

3. What do I want in my future?

Own your own home, buy a new car, retire at age 40, do a specific course, take up sailing. What do you want in your life and in your future? How much will it cost and when do you want to do it? Knowing this helps you have a clear picture of how much you need to save and by when for different things in your life.

4. Is it what I want or what others want?

It seems like an odd question but many people I talk to get caught up in what everyone else has or is doing that they think it’s what they want too. When they dig a little deeper they realise they don’t want those things. Be really clear on what it is you want. This includes your needs/wants vs your kids wants. Kids do not need everything they want or ask for. It’s your job to determine what is best for your family.

This isn’t an all-inclusive set of questions, it’s just a few to get you thinking.

My future

My daughters are 9 and 11, we’re heading into teenage years and high school so life is changing. Recently, I moved house, bought a car, completed some studies and took on more as well as trialling a new career. It’s been a lot of change, from which I have learnt. As a result, the future I had planned is not the same as the one I had planned at the start of this year.

My aim is still full financial freedom. At some point, I will buy property but not now because it is clearly not the time to buy where I live. My immediate future involves finishing my diploma, moving to a home I want in the area we live and continue to invest in various ways. Plus travel, as much as possible.

My mid-term future involves properties, a new car, kids in high school and more travel. Plus full financial freedom.

My long-term future remains open, with the knowledge I will be financially solid.

What does your future look like? Are you aiming for FIRE?

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