Certain things in life are obvious to virtually everyone. The difference between day and night, land and sea, mountain and crater, etc., is immediately clear. As people sometimes say, you don’t need to be a genius to tell them apart.
So too, there are fairly obvious choices we can make when it comes to our behavior. If someone says, “Stay well back from the edge of that cliff because you might fall,” most people would say it was sound advice. Even those intrepid spirits who insisted on peering over the edge would probably admit, upon reflection, that what they were told was sensible.
How about when we are reminded to, “Wear your seatbelt.” Again, I expect that an overwhelming majority of people would agree with this good counsel, even if they do not always follow it. Sadly, life does not always present us with the kinds of clear cut, well defined choices mentioned above.
What is true of life in general is doubly so regarding present financial planning. There are so many opinions, strategies, methodologies and options available that many people become overwhelmed thinking about what to do to create a better life for themselves and those they love. Instead, they put their important planning goals on the backburner and focus on what they know and enjoy. Who can blame them; life is tough enough, isn’t it?
There is an unfortunate price we may have to pay for this avoidance, however understandable it is. Regret. Regret based on poor results or the knowledge that those poor results are coming and we could have avoided them.
I have worked with people, of different ages, who have expressed this regret to me over and over again, with only slight variation. “I should have done something like this ten years ago.” “I meant to do this long ago but I kept putting it off.” “If only we had met when I was in my ______ (Fill in the blank with 30s, 40s, 50s, 60s, etc.) I’ve heard every one of those rationales, or something like them, more than once.
I have amazing news for you, though. You can improve your financial health, markedly and in short order. People say getting started is the hard part. I have found, at least for me, that is not the case at all. Staying started – yes, I just made that up – is what I find most difficult. In the past, I would often start things with great energy and enthusiasm, only to lose that zeal in a week or two.
Have you ever started a diet, made good progress in the first ten days and went right back to your old eating patterns? A good friend of mine likes to say, “It worked so well I stopped doing it.” I think there are two main reasons for this loss of momentum.
1. Unrealistic expectations.
We have been unwittingly conditioned to prefer immediate gratification over future rewards. That is why there is candy and gossip magazines at the checkout counter of our favorite supermarkets. That is why fast food establishments thrive. Of course, bad food and empty information leads to physical and mental decline.
In contrast, the better we are at deferring gratification, the better results we will tend to get. This is true in most areas of life and certainly when it comes to wealth building. Wealth building is predicated, more than anything else, on saving money. As I have said and written often, our savings rate is more crucial than our return rate.
If we begin a plan expecting quantum leaps on a daily basis, we are setting ourselves up for disappointment and ultimately, failure. Because our expectations are not consonant with reality, we can become discouraged by what we perceive as a lack of progress.
If you expect nothing and get a 5% raise today you will likely be pleased. If you expect a 20% raise and only get 10% you may be bitterly disappointed. Despite the fact that 10% is 100% more than 5%!
Instead of being disappointed, owing to a lack of immediate gratification, assure yourself that things worth doing are worth doing well and that meaningful progress takes time. Before long, you will look back and not believe the gains you’ve made.
Here is my definition of doubt: Doubt is fear masquerading as a difficult decision, when the decision is simple and there's nothing to be afraid of.
I do not have a franchise on sound planning. There are many paths to wealth building and financial success. Pick one. I believe that any sound, reasonable, systematized plan will leave you and yours far better off, over time, than no plan at all.
I love to engage my clients in an educational process. I frequently challenge them to challenge me. I essentially offer an open-door AMA. That, in today’s language means, ask me anything. (I only recently became familiar with this abbreviation.) Frequently, the good folks I work with engage in this educational process, ask some important questions, are happy with the answers and implement the plan we have worked on together.
Sometimes, people will present me with alternative plans and ask me to compare them, which I am happy to do. As I said, ask me anything. It usually doesn’t take long to point out the clear benefits of one course of action over another, all things considered. Are there exceptions? Sure, but they are, indeed, the exception and not the rule, at least in my experience.
My method of planning is simple and obvious. I think of it as 5+5=10. Sometimes, our doubts tell us that because 8+2 also equals 10, there must be something wrong. Of course, both equations are, in fact, correct. And here is the thing. Two plans might be equally good, yet one is the plan we are working on. Taking action with a good plan is better than procrastination about implementing another plan, even if it is good as well.
Choose a plan and maintain realistic expectations. Combine that plan and those expectations with consistent action and I believe that, over time, you will be happy with the result, particularly compared to taking no action at all. If you like, consult a financial planner you trust to help.
Whatever you do, focus, make a good plan and take action. You can do it.
Scott R. McGimpsey August 9th, 2017
This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC