The Three 800lb. Financial Gorillas
It’s once again time to dive into the dark and murky depths of personal finance philosophy. Into the can money buy happiness(?) realm.
Personal finance gurus, bloggers, writers, professionals, whomever tend to focus on big long-term future financial goals. Without a doubt, the three biggest goals that they (we) speak of are:
A. Becoming debt free
B. Gaining financial independence
C. Retiring on your terms, when you want
Sure, there will be other short-term financial landmarks along the way that everyone discusses: paying off student loans, getting out of credit card debt, buying a house… but the three biggies remain the same. They are common goals that almost everyone universally strives for.
The Problem with Long-Term Financial Goals
The problem with these three goals is that, for most of us, they are so incredibly far off in the future, that it makes it almost impossible to see the benefit of all of the hard work that it takes to achieve each of them in the present. It’s easy to get caught up in the end versus living in the moment and enjoying the means.
If you’re not careful, you can lose confidence and your life could lose meaning because in your mind, you haven’t yet achieved the goals that you want to achieve.
This post is somewhat a sharing of conclusions and experiences that I have come to, but also an effort to kick myself in the pants for being guilty of focusing too much on end goals (I have a feeling that is pretty common amongst personal finance bloggers).
End goals are integral, if not necessary, to achieve these financial landmarks. However, unless you take pride, enjoyment, and satisfaction in all of the tiny steps that it takes to get there, you will be miserable.
Living in the Now: The Mental Framework
When it comes to financial goals, I believe, getting back to the present moment requires setting the proper mental framework. I’m going to pose some questions, that only you can answer.
- Do I own my stuff, or does my stuff own me?
- At what point do I have ENOUGH?
- What’s more important to me – money or career satisfaction? Is it possible for me to have my cake and eat it too?
- At what point does being cheap cross the line and prevent me from missing out on life’s pleasures?
- What is my threshold for financial risk?
- How can I reward myself in a responsible way for financial discipline?
- How much money do I really need?
- How much money do I want to die with?
Answering these questions will take you a long way towards gaining peace with yourself in your day-to-day. I want to touch on a few things that I have found day-to-day pleasure in.
De-Cluttering My Life
De-cluttering my life is a huge challenge. But it is one that I get excited about taking head on. Periodically, I go through my possessions to get rid of stuff. I find that every time I do this, I start to add more stuff that had escaped the previous round of cuts. My values around stuff is changing.
It’s a game for me, a challenge that I enjoy. And in the process, it has led to me not wanting to spend a lot of money on the latest ‘in thing’.
It helps to keep me in the moment, working towards an end goal, but with a lot of reward along the way.
Moving from Cheap to Frugal
I went from being crazy cheap to now being frugal. The difference for me is that being extremely cheap meant that it was painful to spend any money, regardless of the reason. Frugality, on the other hand, is much more forgiving and enjoyable. It is a game to me. It works.
I find it fun and get a lot of pleasure if I am able to negotiate a lower price for a product or service, lower my overall monthly expenses through budgeting, or simply finding a great coupon to get half off of dinner for my wife and I.
Frugality is a way for me to enjoy the means and forget the end goal. Again, it works for me. What works for you?
Setting Achievable Short-Term Goals
Prioritizing goal setting by placing more value on short-term goals versus long-term goals can help you focus more on the process and reward in the present moment. Maybe your highest priority goal should be avoiding impulse purchases, cutting up your credit cards, balancing a monthly budget through a spreadsheet, or paying off a small debt.
These goals are much more relevant and attainable. They ultimately go a long ways towards you achieving your end goal, but they keep you focused to the near-term.
I don’t pretend to have all the answers, and this is something that I still struggle with daily. Some of my suggestions may work for you, others will not. But I am curious to find out how all of you handle this challenge. What keeps you living in the now despite being far away from your long-term goals?
Good post! It is always good to remind ourselves why we are doing what we are doing.
I really enjoyed this post. Being extremely focused on my long term goals, I sometimes have to remember what Robert Kiyosaki said in his book Rich Dad Poor Dad, “Sure you can get rich by being cheap; the problem is once you are rich, you’ll still be cheap.” Part of the purpose of material wealth is to enjoy it, and some of that enjoyment needs to be right now. Also, we talk about saving for the future and that time is our greatest asset. We need to remember though that time is valuable for the present as well as the future. What value does it serve to sacrifice and slave for some distant goal that you may never achieve? Goals and the future must be balanced with the present and making good on what time you have today.
My husband keeps me in the now. He is all about our future goals too, but he is much more likely to splurge in the now than I am. He reminds me that a brownie sundae may not be necessary, but it is yummy and worth it sometimes too. We balance each other well enough that our budget shows our priorities pretty well.
Our savings goals are paid first, then our bills (including our constand “fun” splurges like cable and maid services), and then the rest is split evenly between savings and fun. For example, here’s our goals and we seem to be accomplishing all of them:
Long-Term (25 years)
– Early Retirement
Medium-Term (7 years)
– Debt Freedom
Short-Term (1-2 years)
– Pay off the car (this month or next month)
– Get our tax account back to $3000.
– Get our emergency fund back to $10,000.
– Top off our padding funds (expecially the future car fund).
– Start fully funding a 2nd Roth IRA.
– Take at least 2 Annual Vacations
@ Landon – Thanks, glad you enjoyed the post. Not a huge Kiyosaki fan, but there’s a lot of truth in that statement. A lot of wisdom in your statement.
@ Budgeting – I enjoy your perspective, and really like the fact that you have long, medium, and short goals (and most are short).
My biggest thing is needing to declutter.
I got the majority of that assessed, something which I’m proud of. For a lot of my financial goals, one of my biggest key elements is that starting early and acquiring assets more than anything else is the most simplest principle to success.
My 800 pound gorilla would be B) Financial Independence.
Interesting insights G.E.!
I’m already debt free so I can already cross out #1. Unfortunately, I might go into debt in the future when I decide to buy a house. So maybe I can’t cross it out yet. One big Gorilla I’m facing right now is the need to invest my money to have it “work” for me in the hope of finding financial freedom. I totally agree that since retirement age is so far off into the future, I still don’t feel the pressure of putting money into retirement. But then again, if I am already financially free, there’s a good chance I can retire comfortably.
Living in the now is also one area I am also struggling. A few years ago, I was too engrossed in the now that I spent mindlessly, even paying my “future” paycheck by going into credit card debt. After a long struggle, I managed to pay my debts off. The experience made me so afraid of spending, that, I now don’t spend even for the things that give me much joy. This often leads to depression. My logical mind is happy because I save money. But my emotional and spiritual mind is not. I’m still figuring out how to balance the two so that both minds are happy.
I think you can be happy ‘along the way’ by not forgetting your priorities…family, friends, faith…..relationships are important and sometimes get sacrificed in our pursuit of wanting more.
@ Allan – making your money work for you is not easy in this market. It’s one that I haven’t figured out yet.
@ Ken – Agreed, but easier said than done.
Not a big fan of coupons. I feel that it’s like i have to spend some money, even if it’s heavily discounted, to try out some restaurant or products that i don’t really know or even believe in, just ’cause they’re heavily discounted.
And i don’t like haggling all that much. It can be fun sometimes, but sometimes i think that you shouldn’t try to put one over the seller. They could give you something at a bargain and that’s well and good for you, but what about them? Haggling could be an emotionally taxing exercise for them and in the end, they end up giving in a bit just to make the sale. I try to see it from the point of view of the business owner/seller sometimes. (not always a good position for the perennial customer, i know…)
But yeah, i do love the mental challenge if having to hold your emotional spending habits to a standard by following a set budget. That never hurt anyone else. And apart from the obvious financial benefits, it can be emotionally and psychologically rewarding when you do find yourself keeping pace with the rigors of a challenge that can only benefit you in the short- and long-run…