Life Planning

This is something I encourage everyone to do.

If everyone did this, maybe our country wouldn't be 17 trillion dollars in debt.


Take a couple minutes from your day and plan out how much money you will need for the rest of your life.

First off, make an estimate of your lifespan. In America, the average lifespan for a man is about 78 years and 79 for a woman. These figures include everyone, so if you determine yourself to be healthier than average, maybe you want to estimate your lifespan to 85 to 90 years.

Anyone can do this.

Take your estimated lifespan and subtract your current age.

For example:

85 (estimated lifespan) - 30 (current age) = 55 (years left to live)

The next step is to determine the amount of your expenses. Estimate your monthly expenses and multiply that by 12 to get your yearly expenses.

For example:

$1,000 (monthly expenses) * 12 (months) = $12,000 (yearly expenses)


Now, just multiply your years left to live by your yearly expenses.

55 (years left to live) * $12,000 (yearly expenses) = $660,000 (lifetime expenses)


Very easy calculation.

To get a better number, subtract your current savings from your lifetime expenses.

For example, lets say your current savings at the age of 30 is $50,000.


$660,000 (lifetime expenses) - $50,000 (current savings) = $610,000 (money you need left)


$610,000.



This is a very simple calculation to do.

Now, it might not be the most accurate figure because it is not that easy to estimate your lifespan, future expenses, living conditions, the future, inflation.

That is okay though. The point of doing this exercise is to be thinking about your future and your finances.

After all, trying to estimate the total money you need at the age of 24 is like trying to hit a target from 1000 yards away.

But trying to estimate the total money you need at the age of 45 is like trying to hit a target from a much shorter distance.

Every person should be aware of his/her current financial position at any time.

My next post, I'll demonstrate how to use spreadsheets to get a better picture of your finances.