Creating a three year financial plan can really improve your money in both short and long term ways.

This plan will seriously help you to make more income, save more money and definitely get more freedom in your personal finance.

One of my favourite ways to get anything done is making long-term goals and kicking my ass to work on it and trying to figure out exactly how I can make it happen.

This is a reason why I love the idea of creating a 3 years financial plan, because it helps me to figure out exactly where I will be in the financial journey in the next 3 years. I’m going to assume you will pretty much become another person because everyone changes so much in 3 years, especially when you’re in your 20s as me.

Take a few seconds right now to think about where you want your money to be in 3 years? How much money do you want to have? Would you love to have financial freedom while earning enough money to retire? Would you love to have your house paid off? Do you want to start your own business or still be working in your current job? Or would you love to have some side hustle that can make you earn more than your corporate job?

A lot of places where your three year financial plan can take you and it is a really great exercise to help you achieve your goals quicker.

So, let’s dig into all the reasons “Why you need one”; and “How to create one!”

Why is it Three Years?

The main reason why I choose to make plans for three year periods is because it’s long enough where you can have the goals be big, however, it’s also short enough that can create actual results relatively quickly and tangible for you. 

I follow the 12 Week Year method of goal setting and it works for 90% of situations when I have a lot of things happen in life (and you too, I believe). So, a good plan will make you achieve more and faster than work without knowing where your goal is.

However, personal finance is a longer game and needs to take more time than 12 weeks, or even 12 months.

Another thing about 3 years is that it goes by a lot quicker than you think, so if you don’t plan in advance and make your goals for the next 3 years, you may wake up one day in the same place you’re in right now and feel super regret! I don’t want it to happen to me and to you either.

So what is a 3 years plan?

Basically, it is a written document ( that you can type on a computer or hand write, whatever you feel comfortable) where you figure out exactly what you want to achieve in your personal finance in the next 3 years (easy thought!)

A three-year plan is a great way to help you focus on your goals and really figure out what you want to have in your life.

In general, a three year plan can include all aspects of your life (i.e., health, travel plans, friends, family, money, career, etc.) but I think that individualized three year plans for each aspect will be much better.

A realistic plan will help you to say “YES” to the things that can bring you closer to your goals, and say “NO” to the things that will keep you far away from your goals. 

It’s just a great way to track exactly where you’re going and see how far you’ve come.

So what can you think about in your three years financial plan? 

1. Buying a property
2. Paying off debt (credit cards, student loans, etc). 
3. building streams of passive incomes
4. building up your savings 
5. and so much more 

So, how to create your 3 year financial plan in an effective way?

There are a number of important questions that you need to ask yourself before starting working through your three year financial plan. These include:

1. How much money are you earning annually? Do you have other ways that you can increase this? (Are you going to change your job? Or start to build up your passive income stream?)
2. Are you in debt? If yes, How much is it? How long do you need to be completely debt free?
3. Have you started saving for your retirement? If yet, how much do you save each month? If not, why haven’t you started?
4. Do you have any emergency savings yet? If yes, how much? If no, why not? You should try to build up at least 3-6 months of expenses. So, in the case you lost job, you still can live on your emergency saving.

In order to create a successful three year financial plan, it’s important that you don’t only set goals. 

You must also have dedicated tasks that you can do everyday or weekly that will help you reach that goal. Here’s an example:

I want to pay off all my debts. Okie, this is a good goal. 

However, it needs to be a little more specific and have the detailed numbers included. 

So, let’s fix it a little bit.

I will pay off my $100,000 of student loans in the next 3 years. Now that you have the clear goal setting. It’s time to figure out the tasks you need to complete each month in order to reach this goal. So, you’ll need to pay off $2,777.78 each month for the next 36 months (3 years) to get out of the debt.

In order to save over $2777.78 every month to pay off these loans you can work on making more money, or cutting expenses and spending less money. 

Here’s an example what I’d include in my action plan for this goal:

To pay off my $100,000 of my student’s debt in the next three years, I am going to start eating out less often, I will stop buying fast fashion products and start being more minimalistic, I will increase my income by at least +$3,000 per month in order to pay it off before the three year time period ends, and I will sell things I don’t need in my closet in order to kickstart that goal.

You’ll want to do one of these kinds of statements for each section of your three year financial plan so you can have actionable steps to take that will get you achieve your goals quicker.

My Three Year Financial Plan

I really like to use examples and show you exactly what I do instead of just talking without ever proving that I do these things too! 

So, I want to share my personal three year financial plan so you could see an example of how easy this process can be. (Easy to write but need me to make a strong commitment and self-discipline to achieve it).

At the time of writing this post I am 25 years old, I have an Valedictorian bachelor degree in Economics and Public Administration from Top University in Vietnam, Vietnam National University; and a master degree in “Global Media And Communication” from the No.1 University in Australia – The University Of Melbourne. I’d say life is pretty great when I’m free to learn and experience a lot. However, I have serious goals for my future!

Since I’m only one more day away from my 26th birthday, I’m going to write this as things I’d like to get done by 29 because I think that’s a great way to keep myself motivated over the next 3 years.

My financial goals for the next 3 years include:

• Paying off my student loans: should be done by the time I’m 28, woah woah!
• Have $50,000 in an emergency fund: this is especially important to me because I have a lot of things I want to do and really love to challenge myself to do different things. So if you want to experience more, you really need more money.
• Buying the first house: It can be in my hometown or eventually Ho Chi Minh City which is the property that has prices at the top range in Vietnam. 
• Have $20,000 in a retirement savings account: I write about personal finance and have no idea how to save for retirement, so like… I should start that soon.
• Make at least $10,000 a month from my various online income streams: Although my journey with the blogs, videos contents and e-commerce start not really well. But with all the lessons I went through and from my inspirational friends who earn “a crazy numbers” online, I know that I will get it soon!
• Travel at least 1 months out of the year: My dream in life is to bring my whole family to travel around the world, so I’m making that happen at least one months a year.

Well, I understand that some of you can think these goals seem too crazy for someone who just left a university for 8 months. However, I create contents about personal finance, e-commerce and social media for businesses every single day. So, I own my businesses, and I have my big goals. 

As one of my good friends who is very successful and lives in his villa in the most expensive area of Melbourne told me: 

“If you want to get something big in life, let dream big first, then, work hard on it. You will get it”.

So, what exactly do I need to do to make this happen over the next 3 years?

1. Stop spending money on fashion and trends because these products get thrown away within a few months every time. And it used to cost me at least thousand dollars per year for this silly hobby!
2. Continue to work on my business to grow my income, because without income, no goals can be possible
3. Start to save more. At least 25% of my income so I can afford to travel and start building up my payment for property.
4. Stop comparing myself to others because having more things than me doesn’t mean that they’re happier than me. And everyone has their own track to run on.

Final Thoughts

I really hope this post was able to show you on how to create a three year financial plan and help you to clarify your financial game in the future. 

Let me know in the comments what your next three year financial plan is focused on, I’m so curious to know!