The 5-Year Rule: How to Set Financial Goals That Actually Work

If you’re a high earner in your 20s or 30s, odds are you’ve heard that you “should” set financial goals—but most advice stops there. What does that actually mean in practice?

Instead of vague goals like “save more” or “retire early,” the most effective way to build real wealth is by using a 5-year framework. Not 1 year. Not 30 years. Five. It’s long enough to make real progress, but short enough to keep you motivated and intentional.

Here’s how to make it work for you.

Why 5 Years Is the Sweet Spot

Most people either:

• Set goals that are too short-term (e.g. “save $500 next month”), or…

• Only think about long-term dreams (e.g. “retire by 50”), with no path to get there.

A five-year window bridges the gap. It’s long enough to allow for compounding progress—whether you're investing, building a business, or saving for real estate—but close enough to feel tangible.

In our practice, we find that this mid-range time frame is ideal for creating clarity, focus, and financial momentum.

Start With the “Why”

Before crunching any numbers, start with what you want life to look like five years from today.

• Do you want to buy your first (or next) property?

• Take a 6-month sabbatical or career pivot?

• Start a business?

• Become work-optional?

• Start a family and feel financially secure?

Your financial plan should be a tool to help you get there—not just a collection of spreadsheets and accounts.

Reverse Engineer the Cost

Once you have a clear picture of the goal, work backward:

Let’s say your goal is to take a year off work in 2029 to travel with your family.

If your household spending is $10,000/month, you’ll need $120,000 (plus a buffer). Factor in things like travel insurance, health coverage, and your opportunity cost.

That gives you a 5-year runway to build a separate “freedom fund,” alongside retirement savings and day-to-day cash flow.

Repeat this process for other goals: Down payment? Business funding? Coast FI? Give each one a target dollar amount.

Layer in Smart Tax Planning

Many goals can be achieved faster—or more efficiently—with tax-optimized strategies:

• Want to take time off in a few years? Start building savings in taxable brokerage accounts (not just retirement) for flexibility.

• Expect a liquidity event or big bonus in a high-income year? You may consider bunching deductions, Roth conversions, or maxing Mega Backdoor Roth contributions in lower-income years.

• Buying property? Consider how real estate professional status (REPS) or short-term rental strategies could offset income in the years leading up to your purchase.

The point is this: How you save matters just as much as how much you save.

Invest With Intent, Not Just Aggression

A 5-year time horizon is long enough to put capital to work, but it still requires strategic allocation.

• Longer-term goals (5+ years): Can likely be invested in diversified portfolios of stocks and bonds

• Shorter-term goals (<5 years): Stick to lower-volatility vehicles—HYSAs, CDs, T-bills, or short-term bond funds

Be careful not to over-allocate your investments for short-term goals. The risk of needing to pull from a down market is real.

Automate Everything

Here’s the secret sauce: automation.

Once you’ve mapped out your five-year goals and assigned dollar amounts and timelines, automate the savings. Treat them like recurring bills you pay to your future self.

Use multiple accounts with nicknames like:

• “Future Home Fund”

• “Year-Off 2029”

• “Baby #2”

When your goals are named, visible, and funded consistently, they stop feeling like distant dreams—and start becoming reality.

Real Financial Planning Is Coordinated

The truth is, most people don’t lack ambition—they lack structure. A solid five-year financial plan is about aligning your income, savings, taxes, and investments with what you actually want from life.

That’s where professional guidance comes in. A good financial advisor won’t just help you grow your net worth—they’ll help you use your wealth intentionally.

If you're a high earner looking to map out your next chapter and want a plan that evolves with your life, we're here to help. Let’s talk, Book a free intro call here.

Disclaimer: This blog is for educational purposes only and does not constitute financial advice. Please consult with your advisor, tax professional, or mortgage lender before making a major purchase decision.