Have you noticed over time some of your friends climb the career ladder, grow their business, or increase their income in other ways? Did their quality of life improve in the past years? Chances are it has. Looking at people I personally know, I constantly see improvement. The “improvement”, however, is mostly in the quality of items they purchase. Better car, a new Dyson, automated coffee machine, bigger TV, new console, expensive sports gear, I can go on and on. Then when we meet they talk about the nice hotel they’ve been to, and how great it was to dine in restaurant everyday. I agree that the short-term life quality has improved significantly for them, but what about long-term goals?
Humans are great at planning, but terrible at executing.
Sometimes I wake up in the morning feeling a bit overwhelmed with positivity. Maybe the coffee hit me better that day, or the weather outside is just right, perhaps I have something to look forward to that day. These are the days when I sit down and plan for future. Everything is great, right? I will start working out, saving, improving myself. Great plan! What usually happens next? Days go by, and even if I have sticked to some goals, most start to fade away. I mentioned in one of the earlier posts about bad days. Those are brutal to your motivation. Everything seems to fall apart, and nothing makes sense anymore. It becomes hard to persevere on your long-term goals, and, eventually, you give up and patiently wait for the next “resolution day” to get started.
We are emotional beings, and we are not great in the moment, even when the bigger picture makes sense. For example, if out of 7 days a week, I don’t feel like it in 1 or 2, that still a majority of great days! If out of 30 days in a month, I stick to my goals for 25, I’m still doing it 83% of the time. Imagine I said that you have 83% success rate at something. Those are great stats! So why do we give up so easily?
Instant gratification.
What drives people to make stupid purchases that go against their long-term financial goals? Exactly the heading of this paragraph. We want new things, and once they occupy our mind, we can’t help, but create reasons to buy them, and can easily make sense of that. What shocks me even more is that people use credit cards for those. While credit cards are not as popular in Europe, rather than in the US, I never understand the though process of someone who buys things now, so that they can work for them in the future. Future is already unpredictable as it is, why decrease your financial odds at it?
I know this all makes sense to everyone “on paper”, but then the new model of that thing you like comes along. And you think to yourself, well, it’s only a bit extra. I’ve worked hard, I can treat myself once in a while. Have you noticed that “once in a while” becomes monthly, or even weekly? I am not saying that living frugally and never treating yourself is the answer, but do you really need that upgrade to feel satisfied and accomplished? Wouldn’t you be happier when you achieve your long-term goals?
Tracking progress is important.
I love numbers and I love to make sense of them. I was never great at evaluating my personal numbers, though. Partially, because I have never seen the progress or trends I am looking for. It’s hard to evaluate yourself (we are emotional, remember?). So when you start cracking the numbers and see you are far away from where you need to be, it’s easier to just remove that from your calculation, and focus on positive things. For example, I have saved very little in the past years, but, hey, my income increased two-fold. Great, right? Well, it is, but also what’s the point to earn the most, when you keep nothing?
It’s honestly difficult to criticise yourself and look at your life as if you are an external party in it. But I believe this is the only way real change can come into it. You can apply this to any area of your life, I will focus on financial aspect for now.
Every business that wants to grow, needs to understand it’s bottom line. Businesses do not have emotions, they are rational. They calculate, look at the numbers, and make decisions based on that. Of course life is not black and white like that, but let’s imagine for a second it is. What is a business that does not understand it’s profitability? It’s a gamble. Maybe one month we earn, probably some we lose, who knows, there are some money in the bank account, so it should be fine. This might seem crazy to some, but I do know people who operate like that.
My point here is that each day can be different, but it is important to keep track of your progress towards your goals. As hard as it is to start when you are at 0, or even negative (in debt), you must track your progress. Do it however you like. Use a spreadsheet, notebook, piece of paper, notes on your phone, whatever works, but do it. You might not see much change at first, but with time, and with correct actions, that will start to change. The more small change you see, the more those large unattainable goals become closer and more real. And the next time you will see that shiny new phone, or car, or whatever you like, you will have a reason not to throw yourself into it. You will have second thoughts that just might stop you from wasting your money again.
Count on things going wrong.
This can also be named “save for future”, but ultimately what I mean is that you do not know what the future will bring. I hope it’s only great things, but we all know something bad will happen one way or another. It can be illness, or you can lose your job, or people you care about might need your help. None of these things are easy, but they are even worse when you need to constantly worry about money. So, what are some practical things to do today? If you have never looked at your finances, start by doing that. Count the percentage of income you save, think how much you need to retire, develop multiple income streams, no matter how insignificant they might seem at first, pay off your debt if you have any. I will be adding on all of the topics in the future.
Final thoughts
As difficult as it might be to start anything, looking back at any major achievement in your life, I bet you wish you have started sooner. If you don’t feel like throwing yourself into it, that’s fine too. Small steps each day still beat nothing. Start planning for your future, and stop wasting yourself in the current. Future you will thank you for that. I am also very much at the start of the journey, and I will document it along the way. This is one of the ways I want to keep myself accountable and on track. What are your ways?
