Part III: Charting Your 10-year Plan Progress
If you set a goal but never measure your progress, what you really have is just a wish. Why is it that we all wish for a comfortable life but so few of us make a plan to ensure we have one? It’s time to stop wishing and start acting!
Image Credit: Jessica Tam
In Part I of this series I stressed why it’s so important to set a 10-year plan; Part II gave you a step-by-step guide for setting your retirement, cash and real estate/housing goals. Now, in Part III, you’ll discover a simple (free) one-page worksheet that makes it easy to track your progress towards achieving your goals.
Remember, if you set a goal but never track your progress, you might as well just be blowing a wish on a dandelion.
The 10-year Plan Count Down Chart
I created a 10-year Plan Count Down Chart to keep me motivated, focused and accountable. It was a key tool in helping me achieve my goals and I still use this tool today.
I’m providing it here free for you to use and customize for your situation. Both links are to the same document; there’s a PDF version for those of you who don’t use Microsoft Word.
- 10 Year Count Down Chart (Word version – this will probably be saved to your Downloads folder)
- 10 Year Count Down Chart (PDF version)
Print a copy of the 10-year Plan Count Down Chart. I’ve set it up to follow our example in Part II of the series where we set an initial overall goal of $750,000 broken down as follows:
- $250,000 in retirement funds
- $250,000 in cash
- $250,000 in real estate
How to Set Up Your Chart
Here are the steps to set up your chart. For the sake of explanation, I’ll continue to use our sample scenario.
- Determine your goals for retirement, cash and real estate. We did that in Part II.
- At the bottom of the chart, enter your current values for each of the three categories. In our example, I entered $30,000 in retirement, nothing in cash and real estate.
- Determine the target annual growth for each of the three categories.
For the Retirement category, we have $220,000 left to achieve the $250,000 goal. So, I divided $220,000 by 10 and see that we need to grow our retirement funds by $22,000 each year. The cash and real estate categories each need to grow by $25,000 each year to achieve the goal.
- Calculate the goal figure in the Annual Recap columns for each goal so you see the total needed at the end of each year to make the goals. You’ll see how I did it for the example scenario below.
How to Chart Your Progress
- Post the chart where you see it every day.
- At the end of each month, X out that month.
- At the end of the year, total the account balances in retirement and cash savings. Enter those totals in the Actual field below the goal amount. I consider the account balance (or vested balance for retirement accounts) rather than just what you contributed. That means you get to count vested amounts your employer contributed on your behalf and any interest earned on the funds.
- How to track real estate:
- If you are a homeowner, you would count the equity in your home in this category.
- If you are a renter who wants to become a homeowner, this is the money you are saving to purchase a home. Once you have purchased the home, you would track your equity here.
- If you don’t ever want to own a home, change the category title to “housing” with the idea that the money in this category will ultimately pay for your rent in retirement.
A word of caution: Always be conservative when it comes to the equity in your home. In the mid 2000’s when property values were sky high, I based my equity on a property valuation equal to HALF of what an appraisal would have stated. As it turns out, when the market crashed, I was spot on in terms of valuing my property. It’s better to be conservative so you don’t come up short when times are bad.
DON’T WORRY IF YOUR ANNUAL ACTUAL FIGURES FALL SHORT OF YOUR ANNUAL GOALS. The beauty of compounding interest means that over time your snow ball will grow and begin picking up steam. You might not meet your goals early on, but if you keep at it, you’ll likely achieve them after all.
Modify to Get a Plan You can Live With
If you find you are setting goals that feel too ambitious, there are a lot of things you can do to make numbers that will work. Here are a few ideas:
- Reduce the total bucket amounts even if you think you need more. You can increase them later.
- Extend the time frame to 15 years or even 20 if you have that kind of time before you want to retire.
- Break your goals into 10-year blocks; it’s easier grasp a 10-year plan than a 30-year plan.
- Look for ways to increase income.
- Look for ways to reduce spending.
- Consider retiring later or in a less expensive place.
I can’t emphasize enough the importance of setting goals and tracking progress to stay focused. If my approach doesn’t appeal to you, find your own method but don’t delay…your future depends on it!
- Part I: Why You Should Have a 10-year Plan
- Part II: Setting 10-year Plan Goals
- Have You Ever Started a Journey Without a Destination?
- Saver Vs Spender — Which One Are You?
- Reduce Financial Emergencies With One Simple Strategy
What Can You Add to the Conversation?
If you have other methods for goal setting and tracking, please share them in the comments below. If you’re struggling with setting goals or making progress, you aren’t alone. Please share your frustrations or successes below.