Something my son Matthew said the other day struck me: “When you don't know what's important to you, everyone else will tell you what is.”
You might be tempted to think “Oh, don’t worry about that – I have a financial plan, and nothing will take me off course.” Really? The truth is that a financial plan rarely survives contact with the world.
There are countless ways that we get taken off course by various influences telling us what our priorities are:
Major life events
Mike Tyson once said it best, “Everyone has a plan until they get punched in the face.” Financial challenges can arise due to job loss, economic changes, business failure, death and serious illness or injury. Even happy events like marriage or the birth of a child can take us off course. These life events tell us what is important and usually distract our focus almost immediately. That is understandable. However, there is a lot we can do to anticipate them, including building up emergency reserves in liquid investments and getting the right kind of insurance plans. We can also do a lot about our mindset in response to these events. In short, ask the question “what am I learning from this experience and how can I apply the lessons to help move back toward my goals?”
The distraction economy has become so smart. Advertisers use complex algorithms to understand exactly what kind of ads to serve us and what nerves to hit. The messages usually involve comparing our current situation to what they argue is a more desired status. It can be as innocent as comparing our morning routine of putting on a pot of drip coffee to the desired experience of pressing a button and having the designer coffee beverage of our dreams. It could also be tempting us to compare the very functional townhouse we live in to the five-bedroom mini-mansion we think we want. In all cases, someone else has a goal of selling us something and fulfilling their goals. In the meantime, we could be stretching too far and in danger of not achieving ours.
Good friends can help to raise our sights. Because we are all at different stages of growth in all areas of life, we can learn from each other. Unfortunately, the dark side of that is comparison and envy. Rather than live in gratitude for what we have, it can be tempting to want the lifestyle and possessions that others have, even when we can’t really afford it. Here is a good answer to give friends when you need to say no. You can adapt it to any situation where you are tempted to spend money simply to fit in: “I would love to join you on that getaway weekend, but we’ve made some changes to our financial plan that require our focus right now.” True friends will understand. If not, that is a great signal in evaluating the true nature of your friendship.
Financial planning is all about asking and answering questions about what you value, what you want out of life and what is keeping you awake at night. Done properly, your financial plan should always help you focus on your goals, not someone else’s.
Richard Vetter is a Certified Financial Planner and owner of WealthSmart Inc.