The financial future you want is built from the decisions you make today. Here is how to look forward with clarity and intention.
The Forward View
Financial planning for the future requires a specific kind of thinking: projecting current behaviors and circumstances forward in time, assessing whether the projected destination is where you want to be, and identifying what needs to change to produce a different projected outcome. This forward view is one of the most valuable — and least practiced — financial perspectives available.
The 5-Year Financial Projection
Take your current financial position and project it forward five years, assuming your current behaviors and circumstances continue unchanged. Current savings rate × 60 months. Current debt payments reducing balances at current rates. Current income growth trajectory. Is this the financial position you want to be in five years from now? If yes, protect and maintain your current behaviors. If not, what specifically would need to change to produce a better projection?
Building Toward Specific Future Goals
Vague financial aspirations — “be more financially secure,” “have savings,” “own a home” — do not generate useful plans. Specific future goals — “have $10,000 in emergency savings by 2028,” “own a home by 2030” — generate specific plans: the monthly savings required, the income growth needed, the debt reduction that must happen first. Translate your financial aspirations into specific, dated goals and then work backward to the monthly actions those goals require.
Disclosure: This site may receive compensation when you click on links or complete offers through our partners. Content is for informational purposes only and does not constitute financial advice.