Here’s Why You Should Ditch Your Five-Year Plan

Where do you see yourself in five years? What’s your five-year plan?

Will you be gunning for another promotion (the one that will net you the big bucks) on your way to financial freedom? Or will you be retired in Bali by then, building your photography business and doing some freelance coding on the side to avoid spending down your nest egg?

These are both admirable goals. But if you’re laser-focused on the five-year plan—figuring out the specifics of where you’ll be, what you’ll be doing, and how you’ll save for it—you’re likely going to miss some stuff. Important stuff.

Goals serve to narrow your focus, which is helpful at first. For those starting toward financial independence, setting goals is an essential step in clarifying your thinking. But treating your ideal life in five years as the singular destination may do as much harm as good. Long-range planning is a heuristic, not a map.

Most of us have been taught that specific goals and plans are the things that separate the successful from the rest of us. The highest performers, we’re told, know what they want and set a plan to achieve it. That’s true for some people who have achieved success, but not all of them. A single-minded focus on a goal also comes with seldom-discussed side effects.

With goal-related blinders on, you’ll ignore opportunities that might improve your life but would slow your path to financial independence.

If you’re like me, you also won’t be able to see that you could get everything you desire (e.g., autonomy, meaningful work, etc.) without reaching your retirement at all.

By treating your early retirement date as The Objective, you’ll necessarily close yourself off to some options around you. Switching careers might throw us off our timeline, so we don’t do it. It’s just a few more years to early retirement, after all, and Bali waits for no one. We’re similarly unlikely to try a new hobby or side hustle that could distract from our chosen path.

In other words, you won’t be seeing the whole board.

Economist Tyler Cowen wrote in his book, Average is Over, about some of the reasons that computers are now superior to humans in chess. Importantly, a chess-playing computer has a library of millions of games that it can use to determine the best move to get and keep an advantage over their opponents. It’s digested the entire playbook. But it’s also willing to make moves that no human would make—sometimes ugly moves.

“That’s a computer move,” goes the common refrain from observers when they see such a maneuver. “No human player would do that.” So, what are the best chess strategists in the world (the computers) seeing that we aren’t?

In short, their entire goal is to win the game. The computers don’t care how they look while doing it, if observers understand why they made one move versus another, or whether that move puts them at a short-term disadvantage in search of a long-term benefit.

We could all take a lesson.

If a goal-oriented approach is preventing us from seeing the whole field, how can we see more of it? It starts at the highest level—the why behind what we do.

To turn that “why” into a set of tools that will help you make decisions and achieve your goals, I suggest swapping your five-year plan for a grand strategy.

A grand strategy allows you not only to see the whole field, but to use it, much like the chess-playing computers that so routinely trounce their human opponents. That’s why a grand strategy is both powerful and flexible.

It can be the difference between a long slog in your career and having a fulfilling life today. It can be the difference between vague, ominous unhappiness and the satisfaction that you’re taking the right action. In short, it can be the difference between living well and misliving.

So, what is a grand strategy and how can you determine yours?

Know your game

Circumstances change. As we’ve seen so far in 2020, they often change rapidly. Maintaining flexibility is a critical skill in generating better than average outcomes in life.

A broad, long-term perspective can provide crucial insulation from the vagaries of the world around you. It also allows you to adjust fluidly when changes inevitably come.

Your grand strategy provides that perspective. It’s the handful of things you’ll live your life by, a mixture of purpose, priorities, and beliefs that will guide you as you navigate the world. A grand strategy is designed to be high-level—the specifics come later.

Given how quickly things change, both internally and externally, we should focus a lot of attention on determining our grand strategy and be unprecedentedly flexible on the strategies and tactics we use to accomplish it.

Let’s face it: You don’t really care about having a million dollars in your investment accounts or a savings rate of 50%. It doesn’t matter if you retire at 35 or 36. You care about maximizing freedom to do the kind of work you want with a minimum of what Mr. Money Mustache calls “Tiresome Bullshit.”

There are dozens, if not hundreds, of ways to do so. Before learning of Jacob Fisker, I wouldn’t have thought that “live in an RV and eat a lot of lentils” would be one, but it is. Mr. Money Mustache’s “salads, bikes, and barbells” is another. No two paths are the same, and yours will reflect your unique personality and circumstances.

Your grand strategy starts with your life’s purpose. A good grand strategy will flow directly from that purpose, giving you a framework for approaching challenges and critical decisions. As an example, here’s a version of my purpose:

To live the best life possible while being useful to the world. I want to leave the parts of the world that I can influence better than I found them. More concretely:

Build and maintain strong relationships with friends and loved ones
Contribute to the good of society, however indirectly, via my day job
Find scalable ways to help people in developed countries have better lives
Use my privilege and position to help a lot of people I’ll likely never meet in developing countries via charitable giving

From that purpose, my grand strategy becomes:

Prize flexibility and freedom over commitments that will compromise either
Heavily factor in time spent with family and friends in making personal choices, including but not limited to my career path, spending of free/vacation time, where to live
Choose work that can positively impact the world or will give me the skills to do so later in life
Prioritize impact in making decisions about how to spend time and money

As you can see, the grand strategy is flexible and approach agnostic. No two people with this grand strategy would implement it the same way. As your thinking evolves and your available information changes, so should your approach. As such, a singular focus on a goal or plan probably isn’t the best way to implement your grand strategy.

You’ll also notice that my grand strategy says nothing about where I’ll live, how I’ll spend my time, when I’ll retire, what I’ll work on, or any investing strategy. Those are strategies and tactics, which don’t belong in the grand strategy conversation.

Most people underrate the importance of understanding their grand strategy and overrate the value of strategy and tactics.

You can waste a sound strategy if it doesn’t serve your purpose or principles. A brilliant tactic can be a devastating mistake if used to achieve the wrong ends.

That’s why everything else must flow from the grand strategy first. Great strategists can achieve incredible outcomes, but they need to know what their ultimate aims are before choosing what objectives to target and which tactics to employ.

Putting your grand strategy into action

Once you’ve decided on your grand strategy, you can start to test strategies to achieve it. It’s a process of constant refinement. There are many potential strategies for each pillar of your grand strategy that are worth exploring. Some will be more effective than others.

You can think of your life’s work as chipping away at a gigantic slab of stone to make a sculpture. You know what you’re trying to do and will use any methods required to get there. The tools you use to shape the stone are strategies.

Some tools work in only a specific context, whereas others work in a range of situations. If a tool isn’t useful for the task, you can put it down and pick up another. There’s no shame in that, nor does it make you (or the tool) a failure.

In my career, my strategy is to seek out meaningful, exciting work that could also help people, though potentially in an indirect way. Over the next few years, I’d like to move to a role that directly helps more people, even if it comes with lower pay.

To increase my freedom, I’d also like to dial down the intensity of my day job and the number of hours I work. I might even try switching to remote work.

To give myself more financial flexibility, it might make sense to move to a lower cost-of-living city, where I would have to spend less time working to meet my monthly expenses.

This strategic approach is one of many that would achieve the objectives laid out in my grand strategy.

Importantly, a strategy is proactive, not reactive. It doesn’t change depending on the whims of the moment, market conditions around you, or something your friend told you at the (virtual) bar the other night. It’s a series of bets and tests to better your position based on your overarching objectives.

Strategies are also more numerous and specific than your grand strategy. For example, here’s a quick sampling of strategies I’ve used to ensure I’m spending enough time with family and friends:

Choose to live in a city within driving distance of a high percentage of my friends or family
Make more frequent holiday and weekend trips to visit
Invite loved ones to come to New York and help defray costs of doing so
Prioritize hangouts with friends who live nearby over time spent reading or writing

These are just a few examples. I’ve used some more heavily than others and haven’t consistently applied all of them. Still, I can pull each one from my toolkit when it’s useful.

Once you’ve landed on a strategy to try, the means of implementing them become more transparent. These are your tactics.

Avoiding tactical hell

There are lots of stimuli that we absorb every day—market prices, advice from family, tips from coworkers. Sometimes these are helpful. Other times, not so much.

Most people don’t have a good sense of their grand strategy, so they’re always jumping from one thing to the next for reasons of varying quality. If you join in, you won’t have a grand strategy or a five-year plan, you’ll be flailing.

It’s no surprise that most of us are tacticians at heart. It’s easy to see the results of tactics. There’s a sense of an immediate, satisfying win when you get a new credit card bonus or snag an improbable deal on an item you need.

But tactics are short-term and fleeting. You could almost always be tweaking tactics if you wanted to, but it’s usually not a good use of time—the benefits for a successful tactician are much smaller than those for a master strategist.

We shouldn’t seek an additional 0.25% of yield on our bank accounts or 2x versus 3x miles on our credit cards if we hope to get anywhere in life. Diminishing returns quickly set in when we invest time to chase the “best” tactic.

Moreover, if you know your grand strategy and focus on testing strategies to follow it, tactics matter very little. Pick simple things that work for you and are unlikely to change. Then get back to living your life.

However, there are times where significant shifts in the environment around us make a change in tactics worth a look. A sudden rise in interest rates might allow you to get a real return on savings accounts for the first time in a decade, or a sudden market downturn might increase your expected long-term rate of return on equities.

Your job is to determine what new circumstances merit changing tactics. (Hint: The answer should be “not many.”)

You have bigger things to focus on and more important things you want to be doing. To borrow a term from Robert Greene, you should avoid “tactical hell” and focus on the things that matter most.

Staying above the fray requires a deep understanding of your grand strategy—why you do what you do, and what you’re working toward—but also an ability to separate signal from noise to determine what inputs are relevant.

That way, you’re spending your time and energy where it’s most useful and scalable. Adjusting your tactics might save you a few bucks. A similar amount of time spent refining your grand strategy can save you years of pointless toil and reduce your risk of misliving.

Trade your five-year plan for a grand strategy

Long-term goals and planning can help arrive at the strategies and tactics you’ll use to achieve your ultimate aims over time, but having a singular five-year plan is a surefire way to miss valuable opportunities along the way.

Even worse, you may realize that you achieved everything you set out to do—accumulated a million dollars, retired from your tedious office job, and purchased a condo on the coast—but you’re no happier than when you started.

With a grand strategy, though, there is no endpoint. There are short-term and medium-term goals, but no definitive long-term vision. Instead, a grand strategy provides priorities and frameworks for dealing with problems and evaluating opportunities.

Using these tools, you can test strategies to achieve your aims without worrying about whether you win, lose, or draw. If your plan works, that’s great; if not, you can let it go and try something else.

Moreover, focusing on a grand strategy keeps you from obsessing over tactics—the thousands of tiny decisions that draw your focus away from the bigger picture.

In short, a grand strategy is a flexible mental model that will allow you to adjust with changes to the environment around you but also stay on track as you change.

Psychologist Daniel Gilbert writes that “Human beings are works in progress that mistakenly think they’re finished.” You think you know what your future self will want in a living situation or job, but you’ll change a lot over the next five years. Who’s to say that you’ll still want to live in Bali when it’s time to go? Who’s to say that you’ll want to retire from your fulfilling office job the second you’re able?

If your five-year plan requires a particular lifestyle that your “n + 5” self doesn’t want, you may be out of luck. That’s the difficulty of tying your future happiness to a singular goal. The best approach is to increase options and flexibility instead.

I used to feel that I’ve lived on a series of one-year contracts since I graduated from college. I never knew if I would change directions in the coming year—a new career, a new city, or a new hobby, and that seemed exhausting.

I now realize that those one-year contracts are the best way to live life. Sure, you should seek stability in the areas that matter, particularly if you’re going through life with other people. But instead of locking in a five-year plan, you should build a set of principles and priorities that will evolve with you.

So, where do I see myself in five years? I have no idea. It’s all a part of the grand strategy.