Fundamentally, financial planning is about actualizing your vision through achieving your goals. How serious are you about getting what you want? What are you willing to sacrifice to get there?
How weird are you willing to be?
Take a moment to think about the average person. Do they have a vision for their life? Do they have written goals that are designed to make that vision happen? Not usually. Is it no surprise, then, that so few people get what they want out of life? Is it no surprise that the tides of life carry them so far off course?
I’d like to ask you to take a few minutes to think about what you want your life to be five years from now, ten years from now, and every decade thereafter. You don’t have to come up with a step-by-step plan, simply because life doesn’t usually work out according to plan. Take the time instead to think about what you want to feel around you, and how you want to spend your time.
For example, I’ve decided that I want to minimize the number of bills I receive. Why? Bills make me feel bad. They demoralize me. So how can I reduce my bills? Some bills are necessary, such as rent or electricity. Some bills can be removed permanently. The best bills to get rid of forever are loan payments. So, I’m busting myself up to get my student loans paid off. In a few months I will have no student loan payments ever again, and you know what? I like that.
You’ll notice my goal doesn’t maximize my profit (disregarding risk). If I wanted to maximize my profit, I would let those student loans run out as long as possible at a very low interest rate, while investing in a diversified portfolio at a higher interest rate in a tax-friendly account. But, you see, I don’t want to have student loan bills for 15 years. The very thought crushes me. So I pay off the loans and forgo possible profit, let people think I’m weird for living a lifestyle that is so much lower than my means, and make steady progress on my personal financial plan that will make my vision of my future a reality.
And isn’t that what planning’s all about?