Shiny car, big house, fast boat, beautiful jewelry, world travel. It could be argued that we are programmed, if not at least acclimated to, wanting the finer things in life. And what’s wrong with that? You work hard for your money, so why shouldn’t you live a little and enjoy some of life’s finer things? The problem is that we don’t know how to get them and spend responsibly. We’re not taught how to make these purchases as part of our greater financial plan. Just because we see friends, coworkers, and people in the media with fun toys, beautiful homes, and on exciting trips doesn’t mean they can actually afford them. Yet, we’re led to believe that we will only be happy if we also have these things, regardless of how we pay for them.
Doesn’t it seem counterintuitive to buy things we can’t afford to be happy when, in fact, by going into debt we actually have more stress and less happiness? Through both my own experiences and those of my clients, I would venture to say that things aren’t what make us happy. Sure, the day you buy the new sports car, boat, or bigger house you’re going to feel great, but if you can’t actually afford it or went into greater debt to buy it, then the luster of your new toy is going to dull quickly.
Looks can be deceiving. Just because your neighbor seems happy with their new toy doesn’t mean they aren’t feeling stress and pressure from the financial burden they’re under. People rarely admit it, but it’s more common than you may realize.
Believing that having things is important is actually irrelevant. Since what we deem necessary and important is subjective and entirely unique to each one of us, what actually then becomes important is how we pay for these things so they don’t become a burden instead of a joy.
It’s my passion and purpose to work with entrepreneurs, founders, startup employees, business owners, and their families. I work with them to ensure they don’t irresponsibly get the things they want in life; they plan for the things they want.
• Before buying something, they identify their hopes, dreams, and goals.
• They are willing to wait instead of needing instant gratification.
• They manage their cash flow like a hawk.
• When they find something they want, they figure out what it will cost and then build it into their financial plan.
• They don’t buy things they can’t afford.
• They don’t buy things for status or looks.
• They understand that money is a concept and a tool, and then they leverage it.
• They know money in itself is not important.
Planning is work, which is not exactly the most fun thing we can think of to spend our time on. Given the fast-paced world we live in and the fact that we are not formally taught how to plan for the things to spend money on, it’s not surprising we struggle with impulsive purchases. These impulsive purchases provide short-term happiness, but in exchange they tend to give us long-term stress. This is an imbalance that can be fixed with financial planning and education. It can help you buy whatever you want without putting yourself in a stressful financial situation.
Start with the end in mind. After all, it’s fun to dream! Figure out what you want and be reasonable. Buying your own island is simply not possible when it’s a long weekend in the Caribbean that you can afford…for now. Once you know what you want, then you can start to plan how to get it.
• What does it cost?
• Will it be a one-time cost or will it be a recurring financial obligation?
• Will you have to go into debt for the purchase?
• Does your cash flow allow for you to comfortably make this purchase?
Financial planning is often thought of as a discussion about rates of return, financial products, fees, investments, asset allocation, and so on. This is a major misconception. Financial planning is the process of using these concepts, tools, and ideas to realize your hopes, dreams, and goals for the future.
When we shift our minds to thinking about it this way, it then becomes real for us. It becomes a fun exercise that we are excited to engage in because it helps us get what we want. This is arguably the first step in this entire process of getting what we want without going broke in the process. Once we’re open to and engaged in our financial planning, we can then take the bull by the horns to enjoy life’s finer things without putting ourselves in situations that wear us down. Get a notepad and pen, gather your loved ones, and have a fun conversation about what you all want for the future.
Derek Notman is a Certified Financial Planner® and Founder of Intrepid Wealth Partners LLC. intrepidwealthpartners.com