Our approach isn’t to look out a year though … we look out 7 years. We sit down, dream about life in 7 years, and then back into what it will take to achieve that over the next 7 years. We use, as a starting point, the previous year’s 7 year plan. Most years, the end goal is the same and it is a simple matter of adjusting the long range target numbers based on life’s gifts (like children, raises, etc.). Some years, like 3 years ago for us, major changes happen and a whole new 7 year plan evolves (like we are going to sail around the world on our boat).

As our life has ebbs and flows, 7 years is the number of years that seems to convey the right amount of dreaming and certainty for us. We found focusing on just 1 year at a time didn’t provide enough of the puzzle. 1 year didn’t allow us to pay off our house, for example, but 7 did. 1 year didn’t allow for us to pay off our car, but 2 did. 1 year didn’t allow us to complete college, but 4 did. So, we went for the maximum time horizon that we felt comfortable with, making the immediate year just part of the bigger 7 year plan.

We’ve been doing this type of planning for the past 13 or so years and it has provided us a fantastic vehicle for looking long term.

Agreed with MoneyEnergy, you must actually write down your plan. We have ours posted on the refrigerator (the long term goal of 7 years, plus the current year we are in).