Setting a sensible financial time frame includes allowing for changes in circumstances. The overall long term end goal may still be achievable, but doesn't put you under undue stress.
The most common underestimation made in financial planning, is how long things will take. Saving for retirement takes ages. But that doesn’t mean it’s not worth putting the first pound away now. Another relevant underestimation concerns how long we are likely to live. For example, it is currently assumed a 45 year old female looking to buy Whole of Life insurance in the UK will live to be 100 (figure accurate as of Feb 2011).
Let’s talk about what this future world is going to be like, in which so many of us live to be 100. The most dramatic change in our lifetime is that of life expectancy. Hard to believe though it is, it is thought that there are children, here on the planet already, who will live to be 200 years old (figure accurate as of Feb 2011).
If you’re 25 now, unless you have unlucky genetic inheritance or are making ludicrously high risk life choices, you are likely to live into your 100s. So the fear of outliving one’s money is a real one for quite a lot of us.
So we can all slow down a bit and recognise that the first steps are the most meaningful of any journey. Set a realistic time frame or you’ll simply end up demotivated, that what never could have been achieved has not been. Far better to see two hours’ work done as the beginning of your journey, than nothing done at all. We all have a tendency to want things yesterday, coupled with a hope that something might accidentally come along by itself.
Making a start is all you can do, therefore it’s what you should do. And you can still enjoy the present, whilst planning the future.
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