Has your financial advisor every asked you…
What are the three things you want your money to provide for you in the future?
If yes, how did you answer that? If no, get a new adviser. How simple is this question? Let’s start here. What do you want your money to provide for you in the future? What is the purpose of your money? Money is not a goal or an outcome.
If I told you I will give you $1 million the day you retire would that make all your hopes and dreams come true? Would that money provide you purpose in life? It might or might not. More likely, we have no idea. We don’t know the value of $1 million at some arbitrary point in the future. So why do we as individuals target a number? Or maybe a better question is why do financial people push you to a number? So many financial people I meet equate everything to numbers. Numbers are guesses. They are simple things that financial people can do to try to make the abstract concrete. Don’t fall for it.
Instead ask yourself why you want that million dollars. What would you do with it?
- Travel - Where is the first place you would go? Why? What do you like about Italy (or Hawaii or Massachusetts, etc)?
- Vacation home – Where would it be? Would it be just for you or for the family to come visit?
- Grandchildren - What would you like to give them? Time, money, both? How? Trips, entertainment, college funding?
- Hobbies - What do you love to do that you never have enough time for? What does it take to get it done? Do it!
These are just a few things to get you started. Start to brainstorm and write things down. The best part is you are allowed to change these things. By writing it down it allows you to review your list once a year. Writing it down helps you visualize it. You might just make something happen long before you thought possible.
Take these 5 Steps to your outcome:
- Ask yourself, “What are the three things you want your money to provide for you in the future?”
- Brainstorm on a pad of paper. Jot down what comes to mind. If you are married first brainstorm individually and then together. You might just share more than you thought.
- Focus on why. When you have your ideas jotted down look at them individually and focus on why they are important to you.
- Write it down. Make your list and put it to paper. Better yet, get pictures that go along with your 3 things.
- Make it visible. Put your list somewhere where you can see it. Let those whom you care about know. Tell them and talk about what your wrote and why.
Once you have done this you begin to give your money purpose. Money itself, or some arbitrary dollar amount, is not an outcome. It probably is going to help you reach the outcome you desire but not necessary. It most likely will play a large roll so it is important. Why the money is important can vary greatly from person to person. Why is money important for you?
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This was a really good article, and I’m glad you pointed out the connection between the money you’re saving and what you want it to do for you. I haven’t seen anyone else bring up this point, and I would much rather be specifically saving for X, Y, and Z rather than just watching my accounts grow. A lot more incentive to save this way.
I’ll be working on your 5 steps tonight
David @ MBA briefs´s last blog ..How to analyze stocks like a pro – part 5
Thank you for the comment David. To many people focus on the numbers. They think a number will solve and answer everything. It doesn’t work that way. People need motivation for success and that starts with a purpose and the desire for an outcome. I think you’ll enjoy my next post as well. It’s going up tomorrow.
Actually, many people have brought this up. What’s unique and interesting here is the section with questions and point #3.
First, it was “I want $1,000,000″. Then the blanket statement was “I want to travel”. But not much thought went beyond that.
By asking people to look at why they want something after they’ve already written it down, it forces them to give the idea a true assessment and get to the root. Similar to what was going on over at eliminatethemuda with the 5 Ys.
FinEngr´s last blog ..Which Way Are You Outsourcing?
@FinEngr
There is no motivation in broad goals. To say you want to travel is difficult to get excited about. But if you said you want to visit the rainforests of Brasil or the beaches of Barbados or the canals of Venice, then you can begin to be motivated towards something. There is emotions and feelings about laying on white sand beaches. When you say vacation it could mean taking a day off from work. Yes it’s a bit relieving but it give you the feelings of relaxing on a a white sand beach in 85 degree weather with a soft breeze through your hair. Listening to the waves crash gently on shore while sipping a frozen rum runner.
Wow – talk about imagery! It sounds like you may have already picked out a retirement destination?
I like that you tie emotions into the equation. That is definitely an important component.
FinEngr´s last blog ..Can Shrinking Yields Be a Good Sign?
I want my money to:
1) Allow me to live where I want. No more Illinois 7-month winters. I want to be able to go outside every day of the year. This is also one of the things I’m willing to pay for.
2) To allow me to pursue my own career pursuits. I don’t want to be stuck in a job which is the reason I’m so anti-debt. I never want to have to do something.
3) To allow me to dive into new hobbies. I was thinking last night that I’d love some nice recording software for recording music on the side. A nice setup is expensive, but I want my money to support my hobbies and their price tag (to a certain extent).
I love topics like this so great work.
-Austin @ Foreigner’s Finances
Austin:
You’re on the right track…now take the steps to get started.
1. Where do you want to live? Maybe you start by visiting a few warmer states to see which ones you like. Plan a vacation!
2. Have you thought about your “own” career? What will it look like? What do you need to do to get started there? Do it!
3. Recording software…perfect. Pick it out, model, company, features. Now you have a goal. Money is just a means. Think of how great it will be to find a warm state, run your “own” career and record music. It’s the emotional feeling that will make it happen.
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