Good morning! Today, I’m excited to share a guest post from Ben Carlson, who writes at A Wealth of Common Sense. He talks about personal finance, investments, and using common sense to get ahead financially.
If money wasn’t an issue, how would you spend your time? Would you travel, live by the beach, hang out with friends and family, quit your job, or do charity work? It’s a tough question because people usually focus on what they would buy if they won the lottery, but the real challenge is figuring out how to live happily once you’re financially independent.
Using this question as a guide can help you plan your long-term financial goals. Instead of aiming to save a specific amount, think about what you want to do if you actually retire. Knowing why you’re saving and investing makes your goals more realistic and keeps you motivated.
Everyone’s idea of a wealthy life is different. Some want material possessions, while others crave the freedom to make decisions without financial stress. It might mean taking vacations without going into debt. Whatever it means to you, it’s important to understand your personal definition of wealth.
We all know the basics of personal finance: save more than you earn, invest regularly, track your spending, and avoid credit card debt. But it’s hard to delay gratification, especially with how easy it is to get what we want instantly today. Saving for a distant future like retirement is tough to picture.
In the 1960s and 1970s, Stanford ran studies about delayed gratification with children. They found that kids who could wait for a bigger reward were more successful later on.
Setting long-term goals isn’t fun for most people. Planning for retirement or a college fund can be daunting because it reminds us we’re getting older. So, we often put it off.
Studies show we learn best from instant feedback, but not so much when results take time. If you can’t see the consequences of your actions right away, it’s hard to change your behavior.
I’m not saying you should never spend money and only save for the future. That’s no way to enjoy life. Have short-term and medium-term goals too. If you want to travel to Mexico every year, plan and save for it. Prioritize what’s important to you.
Financial planning often comes with specific advice like selling stocks now to avoid losses or buying gold for future gains. But this advice might not fit your personal situation or long-term goals.
Making a long-term plan is very beneficial. It helps you think about how much you need to save to meet your goals and sets your investment risk and timeline. Life changes, so update your goals and plans periodically. This lets you track your progress and make adjustments as needed.
Start by setting long-term goals based on what you want to do in the future and why you want to achieve them. Understand your current situation (salary, net worth, spending habits) and where you’d like to be (financially independent, retired, vacationing). Once you have your goals, your investment plan will be clearer.
Living a wealthy life varies for everyone, even when money isn’t an issue. Creating a long-term plan can lead to a more meaningful and satisfying life when you finally achieve financial independence.
So, how would you spend your time if money wasn’t a concern?