Imagine you’ve signed up for your first marathon. You’ve trained hard, prepared. Fueled yourself for the journey. Imagine the multiple-hour long suffer fest, with the focus on doing things right, just putting one foot in front of the other. Imagine, after hours of running, finally crossing the finish line. Would you keep running, once you’ve crossed? What if you didn't know where the finish line was? Would you keep running, or stop?
Too many people (people who don’t actively plan) refuse to ever find their financial finish line. Some believe that they could never cross it, if they knew where it was. Some people are blindly confident that they will be alright on their own merits, planning their own training, and training when they want to, doing whatever feels good to them on that day. But marathons are long.
Thankfully, there is no one forcing us to run a marathon - we have a choice. But when it comes to finances, we all must run the financial race.
When it comes to money, we all set our own finish lines. We all can choose how much is ‘enough.’ But until we give ourselves an end, we won’t be able to know if we are using the best directions.
Rule #2: Know the players
For better or for worse, there are other people on the course when you run. Some are others running their own race, some will help guide you along the way, and others yet will slow you down. The last category is the most dangerous – they are the ones that will upend your race plan. And these villains are different for everyone. For some people, these gremlins show up as debt payments, for others, unplanned emergencies or expenses. Some of the cleverest gremlins are the small expenses that drain us over time, subscriptions to services we never use, or habits we no longer enjoy.
From an early age, we are trained how to buy. And we are very good at spending. Every time we turn on the TV, we are inundated with ads for the latest must-haves. But how can we succeed in sticking to our race plans when millions are spent every month to get me to veer off course? We must see the companies, products and services we buy for what they are, and plan for them accordingly.
There is nothing wrong with spending. And I think we should all aspire to improving the quality of life for our families and ourselves. The challenge is when we mortgage our financial futures for today’s entertainment. And we are tempted to do so with the flashy ads, or the news segments signaling the end of the world. But when we realize that the marketing company’s job is to make you buy, and the newspapers job is to sell newspapers, we can then stay focused on finishing our own race, our own job of working towards financial independence.
Rule #3: Have a strategy
What we leave up to fate, gravity tends to decide.
One of the most important tools we have in our financial lives is simply to make a plan. This plan should be written. It should be based on facts, not opinions. It should outline a path to pursuing your most important goals. And it should be reviewed on an ongoing basis.
To put it simply, every business, service and corporation discussed in Rule #2 already has a plan for you. They have spent countless dollars figuring out just how to part you with your hard earned money. And the less planning you have done for yourself, the easier it will be to get you to spend. Remember, wealthy behaviors are 80% emotional, and a big part of that comes down to how we spend.
The purpose of a financial plan is best summed up with a sales axiom: “People love to buy, but hate to be sold.” We are trained to buy, and we love that feeling of gratification. But we also need to protect ourselves from being sold – and our best defense is by having a plan.
We are forced to run the financial race. For those who run intentionally, with a plan, and with practice, the financial marathon can be rewarding and fulfilling. Having a plan along the way helps give us confidence, and allows us to enjoy the scenery as we go.