It has been said that “Everyone wants to go to heaven, but no one wants to die.” My response to that is “Yes, please.”
We want the delicious doughnut, the juicy steak, or the double cheeseburger and fries, but we also want to look fit and have a healthy heart. It is always nice to take time off from work to travel, pursue other interests, or spend more time with family. If we take too much time off, however, we might not have a job or business to go back to.
Life is full of these kinds of contradictions. We can think of this common dilemma as what we want most competing with what we want now.
I have noted this kind of push-pull dynamic during the financial planning process. On the one hand, we know that we “need to do something’ as the good folks I work with commonly phrase it. “Something” in this context is usually defined as saving and investing more, retirement planning, protection planning, tax efficient strategies, saving for their children’s education, or unifying all of these.
One of the reasons almost everyone - around 90% - has auto and homeowner’s insurance is that you cannot get a mortgage or drive a car off the lot without it. These types of protections have been made compulsory.
On the other hand, according to the Insurance Institute of America, only about half of Americans have life insurance. Based on my experience, I would bet that many of those folks, by their own estimations, have inadequate coverage.
Perhaps they have employer policies or took out coverage many years or even decades ago. It is likely their assets and incomes are far greater today than when their coverage was initiated.
Yet somehow, saving and investing for the future can feel like a punishment, while spending money on consumer items today feels more like a reward. Ironically, the money we save usually grows significantly over time while the money we spend on consumer goods is often lost forever. To what do we attribute this common but clearly backward feeling?
Here again, we see the tug of war between what we want most and what we want now. While we are working, we see other people, our neighbors or colleagues perhaps, driving high status cars, buying trophy homes, or getting expensive renovations done to their dwellings. We feel a bit of envy and naturally want to show our stuff, literally.
What we might want now is to eat at posh restaurants, shop in exclusive boutiques, and wear luxury brand jewelry. Now, right now, we want all these signaling devices that broadcast our success to the world.
What we generally want most though, is to be financially secure and ultimately, wealthy. We want to be able to help our children and families if there is a health emergency, higher education expense, or business opportunity. And we want to live our golden years without a significant reduction in our quality of life.
The good and bad news is that we have a choice; we can appear wealthy, or we can build real wealth. Most people will not earn enough to do both.
Effective financial planning is about reconciling what we want now with what we want most and striking a comfortable balance between the two; one that allows us to live our best life today, while putting us in a position to do so for the rest of our tomorrows.
You can have fun and enjoy life today. In fact, I would argue that you deserve to. You have earned it. At the same time, you can work toward your dreams for the future and gain extraordinary peace of mind from knowing you are on the right path.
If you like, consider working with a financial planner who has earned your confidence, in order to construct a plan that makes sense and feels right. In this way, you will be better able to define what you simply want now, compared to what is of paramount value, what you want most.
Scott R. McGimpsey February 28th, 2022
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 Cetera Advisor Networks LLC 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.