Becoming a Financial Late Bloomer - Phase 4: Look Ahead
Hello there! If you’ve read all three posts (here are the links to posts 1, 2, and 3) that I’ve written so far on becoming a financial late bloomer, thank you so much. They’ve been fun to write and I hope you’ve found them to be helpful. The cute beagle pictures haven’t distracted you too much, I hope! 🐶
As a reminder, a financial late bloomer is someone who actively started managing their money and building wealth later in life. So far in this series, I’ve focused on gaining full clarity of your financial situation, gaining control of your money, and building your routines and habits.
What’s left? The last, and crucial, stage of becoming a financial late bloomer is looking ahead. Yes, I mean doing some forecasting and future planning to ensure that you are on track towards reaching your financial goals. In my Fresh Start Financial Flourish coaching program, I use the term cultivate for this phase.
For someone who is starting to manage your money and building wealth later in life, looking ahead might feel like scary exercise. You may feel shame or embarrassment for not being as far along on your financial journey as you think you should be. You may also be worried that if you do some forecasting, you may not like what you see.
I can relate to these feelings but I can assure you that its better to look ahead than to keep your head in the sand! It’s never too late to start.
Here’s what you can do to look ahead when it comes to your money.
Step 1: Set Your Short, Medium, and Long Term Financial Goals
If you’ve gone through all of the steps I’ve recommended in the previous posts you will have now have gained full clarity of your financial situation, have control of your money, and have your money routines and habits dialed in. Holy smokes, you’re on a roll!
It’s now time to sit down and think about your short, medium, and long term financial goals. Short term would be anything in the next year, medium-term would be in the 5-10 year range, and long term would be 10+ years away. Set some time aside (invite your partner) and start writing!
Here are some questions you can ask yourself as you go through the exercise.
Where Do I Want to Be?
What are my financial aspirations for the next 1, 5, 10, or 20 years?
Do I want to buy a home, start a business, travel, or retire comfortably?
What Are My Values and Priorities?
What matters most to me in life? (Family, career, experiences, etc.)
How do my values align with my financial goals?
What Lifestyle Do I Want?
What kind of lifestyle do I envision for myself and my family?
How much do I need to earn and save to support this lifestyle?
What Are My Career Goals?
Where do I see myself in my career in the next few years?
Do I need to acquire new skills or education to advance?
What Are My Retirement Goals?
At what age do I want to retire, and what kind of lifestyle do I want in retirement?
How much do I need to save each month to achieve my retirement goals?
How Will I Manage Unexpected Events?
Do I have an emergency fund to cover unexpected expenses?
Do I have adequate insurance (health, life, disability, etc.) to protect against unforeseen circumstances?
Step 2: Use a Retirement Calculator
If you’ve thought about your retirement goals in the previous exercise, you’ll now be able to go online and use a retirement calculator.
As a financial late bloomer, I didn’t learn to use a retirement calculator until I was my 40’s. I think I resisted the idea in the early stages of getting my financial life in order because I just didn’t want to look. There was definitely a bit of head in the sand syndrome happening. I have a very good government job with a pension but I started this job a bit later in life than many of my colleagues and will never receive a “full pension”. I also didn’t start investing for my retirement until later in life. So I think I resisted the idea of plugging the numbers into a calculator.
I had a similar experience with a coaching client. She successfully and enthusiastically navigated through the main stages of my money coaching program but as we moved into looking ahead she told me that she really didn’t want to use a retirement calculator. According to her, she didn’t need to know that she would be working until she was in her 80’s. Once we actually did go through the exercise (when she was ready), she said that she felt a lot better about her future and that she knew where she needed to focus to get on track.
There are so many options for retirement calculators online and they will almost all give you a different result so caveat emptor. These tools will give you a very general idea of whether you’re on track. However, it is important to know understand their limitations. Read the fine print. Does the calculator account for inflation? Does it account for income taxes? Can you input what you’re expecting to receive from the government in retirement (e.g., Social Security or Canada Pension Plan)? I suggest using a few different calculators and comparing the results while keeping their limitations in mind.
The one calculator I’ll link to here is the Canadian Retirement Income Calculator as it is from the Government of Canada. I’ve encouraged my Canadian clients to use it. It is easy to use and will give you a general idea of how close you are to reaching your retirement goals. I haven’t found an equivalent developed by the United States government. If you know of one, please let me know in the comments below.
Step 3: Create a Plan to Reach Your Goals
My colleagues at work tease me because I really love a good plan. When it comes to money management, I really love a good plan! I know you might not share my enthusiasm but I encourage you to build a plan to reach your financial goals. How your plan is structure is totally up to you. The plans my clients create are heavier on the shorter term details and then get a bit less detailed into the future.
To give you an idea of what I mean by a plan, here’s an example of a plan that a client and I are currently working on together as part of her coaching program. She is a 50 year old woman living in the western United States who is on the other side of a divorce.
Step 1: Gain full clarity of your financial situation
Timeline: October 2023 - January 2024
Milestones
Complete first version of Financial Fit Check
Complete net worth calculation
Complete first version of retirement calculator
Step 2: Gain control of your money
Timeline: November 2023 - January 2024
Milestones:
Get out of overdraft
Create a balanced Financial Fit Check
Set up budget in YNAB and start using it consistently
Set up automation, where it makes sense
Step 3: Get a month ahead in YNAB
Timeline: February - June 2024
Milestones:
Reach a month ahead in YNAB (this will act as a “mini” emergency fund if needed). Use tax refund.
Step 4: Pay off high interest debt
Timeline: June 2024 - TBD
Milestones:
Complete a debt repayment plan
Pay off CC1
Pay off CC2 (woo hoo!)
Step 5: Save an emergency fund
Timeline: TBD
Milestones:
Decide on amount of emergency fund
Decide on your “rules” for using it
Save fully emergency fund
Step 6: Maximize retirement contributions and start saving for other goals
Timeline: TBD
Milestones:
Update retirement calculator
Increase monthly retirement contributions
Consult with a fee-only financial advisor/planner (make sure they are a “fiduciary”) and/or learn more about investing so that your asset allocation and investments are set up to meet your needs and you are minimizing fees
(if there is room) adjust budget to start saving for other goals (travel etc..)
Step 7: Pay off car loan and re-adjust budget
Timeline: TBD
Milestones:
Car loan paid off
Start to set aside money each month for your next vehicle
Increase monthly retirement contributions
(if there is room) adjust budget to start saving for other goals (travel etc..)
Step 8: Pay off mortgage and re-adjust budget
Timeline: TBD
Milestones:
Mortgage paid off
Increase monthly retirement contributions
(if there is room) adjust budget to start saving for other goals (travel etc..)
You may not relate or agree with the order that my client has chosen to reach her financial goals and that’s fine. These are the steps that she has (enthusiastically, I might add) decided to take. You might feel like a different order would make more sense to you and your situation might be completely different than hers.
At this stage you could also work with a financial advisor or planner on a comprehensive financial plan. Make sure to work with a fee-only financial advisor or planner, who is paid a flat fee for their services. They should also be a “fiduciary” - meaning they are legally bound to recommend investment products or strategies that are most suitable for your financial goals and risk tolerance, rather than those that may earn them higher commissions or fees.
Conclusion
The journey to becoming a financial late bloomer has been quite the ride, hasn't it? From sorting out your finances, to taking control, to building those important money habits to making a plan, you've come a long way!
If you’ve read the last four posts and thought to yourself that you could use a helping hand along the way as you navigate these steps, I’ve developed a money coaching program with financial late bloomers in mind. It’s called Fresh Start Financial Flourish. As your coach, I will actively listen, ask insightful questions, show empathy, and provide encouragement. I will hold you accountable, but with a gentle approach that keeps you motivated and on track. We will also celebrate your wins, big or small!
If you’d like to chat more about your financial situation and what it would be like to start working with me as a coach, please feel free to book a free discovery call with me.
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