Planning Balances Life

“Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations. You have to pay attention to money, but it shouldn’t be about the money.”   – Tim O’Reilly.

Road trips are not primarily about gasoline and life is not primarily about money.

There are some who find money a compelling subject and whose lives are devoted to its acquisition and retention.  Many self-made centi-millionaires had difficult childhoods and possibly the accumulation of vast wealth is in response to a deep security need.  Others play a game where money is how you keep score.  Still others are trying to become the richest person in the cemetery.

Planning improves with a complete answer to the question, “What are you trying to accomplish?”

The majority of people, the ones who hold money to be important but not the purpose of life, will be sufficiently wealthy when they have enough money to do the things they want, have enough to help others, have a margin of safety, and some left over at the end of their lives.

There are efficient ways to get “enough” money.  Vast sums normally involve greater risk, more time commitment, and lower amounts consumed in the enjoyment of the journey.  Most of us are not willing to tolerate the price to acquire great wealth.

Be careful in defining “Enough.”  Think about it in terms of the purpose of the money.  When that is clear, using only moderately complicated arithmetic you or a planner can calculate how much your “Enough number” is.  Then and only then will you choose a method to achieve it.

If you start with just a number, the problem of accumulating becomes a bit abstract and abstract is not very motivational.  When the “Enough number” means something, like live a certain way, take vacations, play golf, own a boat or cottage, educate grandchildren and provide healthcare as required, then people stick to it longer.

Plans like this take decades to accomplish.  Very few of them succeed without emotional motivation.

A more serious mistake that some people make is the mistake of choosing a method before they decide on what the method must achieve.  That tends to fail because it is even less motivating than a mere number.

A good plan deals with all aspects of life and its development.  It will provide balance among the past, the present and the future.  Some people emphasize the present at the expense of the future.  Still other emphasize the future at the expense of the present.  It is  important to know how much to save, but good objectives and methods will also tell you how much is okay to spend. The present is important, and guilt-free spending can only be accomplished when you know what is truly available.

Life planning can be smooth or bumpy, or it can fail to start entirely.  Which one is often the natural outcome of a poorly considered beginning..

 

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com