Defining Financial Success
Conventional thinking equates success with happiness. When you see someone who has all the societal symbols of success – an accomplished professional life, an expensive car, a big home, etc. – it makes sense that you would assume that outwardly successful person is happy. However, this thinking is flawed for a few reasons. First, we are only able to measure someone else’s success by what we can see of them. It’s simply not possible to know what anyone else truly feels or wants in their heart unless they disclose that to you. Second, we can only try to measure someone else’s happiness and success by using our own definition of those words. How we define success and happiness gives much insight into ourselves but doesn’t really shed any light on how others may define those terms for themselves. In truth, we all use very different yardsticks to measure our own ideas of happiness and success.
How we measure financial success follows this same train of thought. Each of us has our own definition of what constitutes financial success, and hammering out your own definition helps you establish a prudent path to your own financial success and happiness.
What matters to you
Take a look at the many areas of your financial life. How financially successful are you in each of these areas right now? What are your long-term goals for each of them? What plan do you need to put in place to achieve these goals? Knowing what is important to you is essential for creating a plan to get you there. Each of us have different hopes and dreams for our futures, and each of these unique dreams require a personalized financial approach to reach them. For example, try to visualize your life in retirement. For some, financial success in retirement can mean a home in a sunny locale with much time spent playing golf. For others, a quiet life of daily yoga and time spent volunteering for a cause near and dear to their heart brings happiness. You must decide for yourself – regardless of conventional wisdom suggests – what your version of happiness in retirement will look like.
Keep your eyes on the prize
It is easy to get caught up in the hustle and bustle of everyday life. With all the daily responsibilities that come with career, family, and community, it can be a challenge finding time to reflect on the future. Oftentimes you might find yourself worrying about the future as opposed to letting yourself simply ponder what good things it may bring. Staying focused and “in the moment” can be helpful in keeping fears in check and allowing yourself to view the future as a place filled with possibilities. Viewing your financial goals as the product of many well-chosen steps over the long haul – with each successful step being an achievement – makes the long-term haul of financial planning easier to digest. Short term goals attained add up and eventually become the realization of long-term financial goals.
Part of the difficulty you might face when thinking of the future is its inherent uncertainty. Unless you have a crystal ball, you don’t know what roadblocks you might eventually encounter along the way that threaten to sideline your financial goals. Planning early and being able to refocus when necessary is essential to keeping your quest for financial success current and relevant. The big picture can become blurred when unexpected life events that cause stress and anxiety arise. One effective way to combat these fears of the unforeseeable future is by implementing a long-term mindset. For example, using retirement money to make a large purchase may have negative tax implications. However, after careful consideration, you may find that it is what makes sense for you over the long haul. Viewing your financial strategy akin to the “many moves ahead” mindset of a chess player can help you make a series of carefully considered decisions that ultimately result in successful attainment of your long-term financial success.
Keeping up with the neighbors
As mentioned at the beginning of this article, defining success and happiness in others can be a tricky proposition. Since all you can see of others is what they choose to show you, knowing the true nature of their happiness is out of your reach. However, the things that you can see can sometimes make you feel the need to compare their apparent success to yours. While it may seem that neighbor with the big house, fancy new car and swimming pool “has it all”, the real danger is in comparing yourself to them and judging your own financial success based on their apparent success. The short-term benefits of keeping up with the Joneses may offer some fleeting satisfaction, but the long-term effects of engaging in status symbol one-upmanship may threaten your overall financial health. Creating and living within a budget – for those of both modest and extraordinary resources – helps you live within your means, save money for attaining your goals and achieve greater success over the long haul.
Investing requires much time, patience and dedication. Get rich quick methods often don’t work and can derail your financial goals if things go awry. Keep your focus on diversification and don’t give too much credence to the latest and hottest stock pick – investing is a marathon, not a sprint. While there is no such thing as zero risk investing, making careful decisions can help decrease your level of risk. That being said, for your portfolio to grow over the long term you must assume some level of risk. Avoid reacting to news headlines by making rash decisions. A tempered and prudent long-term approach to investing is a prudent path for reaching your goals of personal financial success and happiness.