We’ve already talked about how there are so many paths and so many choices when it comes to life and our finances.
I believe that because of this plethora of choice, many of us are sleepwalking down a path, crossing our fingers and hoping it’s the right one. What invariably happens is we wake up one day and wonder how on earth we arrived where we ended up. A place that is often littered with financial stress (or financial apathy).
Think about your own story for a moment.
Perhaps you started work and decided you were going to just relax and enjoy earning an income for the first 12 months and not give any thought to saving. To enjoy life before it all becomes too serious. Only now it’s three years later and you still haven’t anything to show for the three years you’ve been working. Or perhaps you started a family and decided to start putting money away immediately for the kids’ education only babies are expensive and you never quite got around to it. It’s now time to start thinking about school choices and you’re hoping desperately the school you’ve chosen will accept credit cards or payment plans. Or perhaps for the last five years it was always your new years’ resolution to buy that investment property, contribute more to super, figure out your life insurance or work out whether you’re honestly going to be able to retire at age 65. Only by the second week in January you’d already lost interest or become confused by choice or how long it would take so you opted out. And popped your head back in the sand.
…start by figuring out what you want your life to look like. To start designing the life you love. And creating a plan to make it happen.
All these stories are so common to so many of us. Many of us have our own version of how we’re financially defaulting or opting out.
That’s why I believe we need to move from living a life by default to a life by design. It’s a much more interesting concept than just talking about goals and what you should be doing with your finances and hopefully it’s something you’re far more interested in as well.
It’s also how we move from financially dire to financially resilient to financially well.
After all, your short-term goal may be to sort out your credit card debt, start saving for your kids’ education, save a chunk of money
so you can buy your first home or start contributing
more to superannuation. The problem is, none of these things cause you to do anything differently with your finances because the truth is, you’re not excited about them.
The truth is, if you were excited about these goals, you would have done something about them by now. Instead, it’s fallen into your admin or ‘to do’ bucket which isn’t an inspiring or motivating place to spend time. So, you don’t.
That’s why I want you to start by figuring out what you want your life to look like. To start designing the life you love. And creating a plan to make it happen.
I’m not suggesting the life you’re designing will involve a lotto win, marrying a billionaire or having a long-lost-relative that you never knew pass away and you inherit their millions. That’s all the stuff of fairy tales. I’m also not talking about vague resolutions or intentions. There’s a reason why most of us fail to follow through with New Years’ Resolutions. It’s because we’re essentially just wishing at that stage and let’s be honest, hoping a fairy godmother will appear and magically save us from ourselves.
Instead, I’m talking real life, pushing you slightly out of your comfort zone, designing a life you’re genuinely excited about creating for yourself and your family (if you have one.)
It’s about you choosing the path you want to walk, run or skip down and then consciously and deliberately taking steps so that you do.
Now, before we keep going, let me just address the goal cynics that are reading along, shaking their heads and thinking this is ridiculous. After all, why think about designing the life you love when you’re already in it. When you already have the two kids, big mortgage and you’re starting to fret about retirement. Or when you’re five years into retirement and fairly con dent you have no options left. Or when you’ve no idea what you’re going to be doing in ten months’ time, never mind ten years!
The reason we do it is so that you have choice.
Now, words like choice, freedom and wellness are bandied around a lot these days and they’re something many people say they’re interested in. The problem is, particularly when it comes to our finances, we’re behaving as though these things are at the bottom of our wish lists.
Sure, you might be in the middle or the third quarter of life and feel that you don’t have the option to design the life you love from here. Or you might feel that the future is a big, vague cloud with many things unavailable to you so why even start if nothing is going to come true that you are designing for.
Let me encourage you to think differently.
That’s because we always have options and we always have choice. We may have limited choice, we might not be able to design the life of our five-year-old fantasies (complete with a magical pony) but we can still start designing and planning for a life we’re excited by. For however long we have left.
Will that life we’re designing or planning for come true exactly as we want? Potentially not. But by planning for it and financially preparing for it, what it will give you are options and choice.
Now that’s something I know most of us want no matter what path you ultimately choose.
How do you start?
Easy. You start by recognising what path you’re on now, describing how you want your path to look and figuring out a plan to get there.
Sounds simple and this stage really is. But there’s still some exercises you need to do to figure this out for yourself.
We’re going to start by figuring out what your money story is. What’s the story in your head and how do you act as a result. Grab a piece of paper and answer the following questions
Think about the next ten years of your life (or the next five if you genuinely can’t deal with ten. Three at the absolute minimum). If you could summon your future self and ask them what your life was like, what would they tell you? Or rather, what would you like them to tell you? Remembering, we need to live in the world of reality (no Lotto wins!) but also what you’d genuinely love your life to look like. Be as specific as you possibly can. Write what you’d tell yourself or if you’re not a writer, draw it, mindmap it, video it or whatever medium works for you.
If you could summon your future self and ask them what your life was like, what would they tell you?
If your inner critic pipes up and tells you this isn’t realistic, tell them to pipe down! If you’re worried that what you’re dreaming up won’t necessarily be accepted by your peers or your friends, who cares! This isn’t about them, it’s about you.
Examples of the life you’re designing might include travel, business, corporate success, family success, sending your kids to the private school you went to, income of $x amount per year, buying a house, owning a number of investment properties, being child-free, owning investments worth $1,000,000, an income of $100,000 per year, retiring at age 55 and earning $60,000 a year, adopting, fostering, having no debt, a sea change, a tree change, heading off on a cruise in retirement once a year, rebuilding from a relationship breakdown or starting a not-for-profit.
The important thing is that it’s something you’re excited by.
Dreaming is the easy part. Looking at the path you’re on, deciding if it’s right for you or what you want your new path to look like can be fun.
The important stage comes next. It involves figuring out the steps you need to take this year to do something about creating that path you want to design.
That’s because if you’re drowning in credit card debt and the life you want to design involves buying a home, you need to do something about that debt. Pronto. If you’re earning $50,000 a year with no assets to speak or and you want to retire in ten years’ time then you need to get moving and maybe start thinking about adding another income stream that you’ll contribute to super to get you there faster. Or perhaps you need to compare your credit card options through comparison sites such as comparethemarket.com.au.
This exercise is all about the next twelve months. Take a look at the life you want to design from Exercise one, then write down the challenges you need to set for yourself and complete over the next 12 months in order to take you further down that path.
It’s no different than deciding to run a marathon. You might dream of running a marathon in eighteen months’ time yet you’ve never run a day in your life. You can’t just sleep walk to the starting line and expect to run! Instead, you’re going
to need to figure out a running plan, find a good physiotherapist for when you break down, work out distances you need to be running by different milestone dates and then most importantly, you need to start.
Goal setting and action plans for designing the life you want to consciously live are no different.
Exercise One involves you figuring out the distance and the type of race you want to run. Exercise Two involves figuring out your running plan for the next 12 months. As well as who you’re going to turn to when you break down and stop. Because you will. That’s why I think it’s so important during this step to figure out who’s going to coach you, how you’re going to be kept accountable and what your next steps need to be. You may as well acknowledge now that you’re going to break down and that it might be tough. So figure out a plan for when you become a little unmotivated.
That’s it! Now it’s up to you. Work out the challenges you need to complete over the next 12 months below, write down the steps you’ll need to take, the date that you’ll need to have them completed by and then the only thing left to do is start.