Living rich vs dying rich
Good morning!
Thank you! Thank you! Thank you!
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I want to write and speak about what's on your mind, so your feedback is truly appreciated.
Thanks again!
Living Rich vs Dying Rich
There's a BIG problem with most financial advice.
The majority of financial advisors and the financial media are focused solely on building wealth.
Saving, investing, and sacrificing your time and energy to accumulate more money.
There's not shortage of information and opinions about investing and how to get more money out of your money.
How and where to save as much as you can.
The long-term financial benefits of skipping your daily latte at Starbucks.
Now, don't get me wrong. We need money and more isn't necessarily a bad thing.
But ultimately every decision is a financial decision, directly or indirectly.
So when you take the promotion or new job that comes with higher pay, higher expectations, and more hours. Or when you forgo that family vacation just so you can "max out" your 401k contributions for the year. Or when you miss your daughter's dance recital because you have to get your project at work done before the deadline.
You're making a decision to sacrifice today in exchange for a better tomorrow.
And here's the rub... saving and investing for tomorrow necessitates some degree of sacrifice today.
Delayed gratification, etc.
But it calls for balance. Nuance. Thoughtfulness.
It's not an all of none proposition, if you ask me.
But I see many financial advisors - and their clients - so focused on tomorrow that they're not fully enjoying their lives today.
Save more. And then some more.
Work longer. You only want to retire once, right?
Take more investment risk. (or as much risk as you can stomach)
Less time with your children as they grow up.
Poor sleep.
Lousy diet.
Weight gain.
It's OK, you tell yourself...
I'll work on some of these things once I make a certain amount of money.
Or have a certain portfolio balance.
Or some other arbitrary goal.
Or, one of the most insidious of all internal stories that we tell ourselves... I'm doing all this now so I can really live it up in retirement.
But be warned, it's all too easy to move our own goalposts.
And even if you're on the "I'll really live it up in retirement" or what I often refer to as the deferred life plan, are you really going to let go of your lifestyle habits built over decades of saving and sacrificing for tomorrow.
Because once you're retired, it's not uncommon that you'll still live another 25+ years.
I find many people reach retirement only to then have trouble making the psychological switch from saving, saving, saving to spending and enjoying the wealth they've accumulated.
Same problem, but now there's no paycheck. Which can make some savers become even more frugal. And fearful.
Or what if you save, save, save for retirement but die unexpectedly when retirement is still another 5 or 10 years off?
How do you plan for a confident and comfortable future while still making the most of your life today? And each day along your life's journey?
You need to have a process by which you can regularly evaluate the direction you're heading and evaluate whether or not that direction aligns with where you want to go and what's important to you and those you care about.
While perhaps a little easier said than done, it really is that simple.
Otherwise you run the risk of dying rich having never really lived at all...
Yet most financial information and advice is based on the premise that it's all about sacrifice today so you can really start living once you retire. But even in retirement, there's often an implied assumption that you need to spend as little as you can manage.
I take a different approach...
I think you should spend as much as you can manage. Today. And in retirement.
You should retire as soon as you want to (and can afford to).
You should save only the amount that supports your personal financial plan.
You should take the minimum amount of risk you need. Not the maximum amount you think you can handle.
Tomorrow isn't promised. But you should still plan for it.
And while you're planning for tomorrow, you should be making the most of your one and only life today.
And tomorrow. And next week. And next month.
Money is meant to fuel a life well lived. A rich life.
Not to have you run the risk of dying on a mattress stuffed with money that you could have spent and enjoyed...
Links & Things
Listen in on my latest podcast conversation with Adam Kol, The Couples Financial Coach. We had an interesting conversation about how couples can communicate better around financial matters.
And be sure to share, subscribe, and leave a review if you feel so inclined.
Thank you, as always, for reading.
Until next Wednesday,
Russ