This post is going to go out to a different audience than most Personal Finance Articles. This one is going to go to those that have already largely optimized their finances. I can imagine many of you are now asking, Now What? Well today I am going to attempt to answer that question as I know I struggle with the same question sometimes.
The Big 3 of Personal Finance
Most personal finance articles, except those that might focus on a technical topic like tax advantaged accounts, tend to focus on the big 3. What are the big 3? Invest, Save, and Earn. Simply put, personal finance is just that, simple. It ultimately comes down to optimizing your investments and saving while increasing your earnings. I am sure if someone did a statistic across personal finance they would determine that 50 percent of personal finance articles are about getting over that hump of starting one of these 3 and motivating you to continue. (90 percent of the remaining 50 may just be people’s monthly income and asset reports…)
Difficult Teaching and Coaching the Advanced
The thing is, there will come a point when you have heavily optimized each of these 3. Then things get harder to teach. I saw something similar years ago. Going back to my younger years I assistant coached wrestling at the college club level for a few years. I quickly learned it was incredibly easy to coach a new wrestler. The fundamentals were so simple and the building blocks do not change. No the complexity comes in to what to do with those who have mastered the simple basics.
Execution is Simple
Sure there are plenty of specialized things to discuss, but personal finance, like wrestling, mostly comes down to the basics. For example, I could teach you how to invest in Bitcoin or some other exotic investment. But the reality is you do not need all that. A simple 3 -5 fund portfolio would suffice for the majority of people. The answer to success is simplicity not complexity. The same holds true for wrestling. Doing a few moves really good usually leads to success. So really those type of posts are more about curiosity then advising you to go out and purchase a truck load of gold. But that leaves the personal finance expert with a question, Now What?
But Now What?
I often see myself asking now what as well. We’ve built ourselves to a point where our finances are self sustaining. But the thing is, like those experienced wrestlers of yesteryear, there still is a reason to push forward. Resting on your laurels is a good way to let lifestyle inflation creep in or, worse, miss out on future opportunities. There is always room for at least some improvement and always a need to keep pushing forward.
Minor Continuous Improvements but No Major Changes
Take the need to always improve. I save over a year of expenses every year. The reality is I have no pressing need to go all out optimizing my expenses given my current retirement plans. And yet, in the last year we have significantly reduced several expenses our household operates on. Things like more aggressive travel hacking, structuring income better around taxes, and switching some providers to lower cost equivalents have reduced our expenditures by a few percent. These are not going to lead to millions of dollars, but they remove waste with really no cost to myself. Similar to an olympic level wrestler, coaching doesn’t teach them to wrestle. It may however make their shot that 1 percent more efficient that helps them out in a particularly tough situation.
Complacency is the Enemy of Success
But to be honest, that subtle improvement is not the big reason for continuing to work on these things after you’ve mastered the basics. No the real driver is not to become complacent. Complacency leads to the undoing of what you have done to date. Life Style Inflation is a type of complacency. Or baring that it may lead to you not being able to respond if things change. For example, if your job becomes threatened due to technological change you may miss the signs and not prepare for other opportunities. No the number one reason to keep on plugging at it is to be able to remain at least at your current perch or better.
So how do you do that? How to stay motivated when your already mostly optimized?
- Automate – The biggest key is to automate most of what you’ve developed to date. Like the high level wrestler who 90 percent of time acts on instinct rather than thought, you need to set up your existing savings and earning plans to happen with or without you at the wheel.
- Monitor – The second key is to continue to monitor. That which is not measured does not succeed. Just because you are at the top of your game does not mean you can ignore your progress. Keep those goals and your progress toward them moving.
- Do Something Else – The third key is going to sound almost the opposite of the first two, but doing them allows the final to be successful. The third key is to turn your focus to something else for a while. I write a lot about enjoying your life’s journey rather than treating retirement as a destination. I do this for a multitude of reasons, but a huge one is long term motivation. When you are 5-10 years in, saving one times your salary yearly, and sitting on many multiples of your annual expenses, but still years away from your Financial independence number, early retirement is not going to be enough to keep you motivated.What is going to keep you happy and motivated is to occasionally step outside finances and focus on your other hobbies. If you have the first 2 set you can do that and probably come back even more successful than when you take a step back. Note, by this I’m not saying do nothing in finance for years on end. I am saying if your savings rate is humming along you probably can get away with not scrutinizing every purchase category monthly. I am saying you don’t have to take every frustrating job just because it pays more. You also don’t need to micromanage your investments. I’m saying every article you read does not have to be about finance. You can do other things then focus on finance.
How I Take Breaks and Handle My Now What
The third key probably seems a bit weird coming from a personal finance blogger. I’d love nothing more than you to come to this site daily and read my tips and rantings. I am sure I occasionally might even say something useful. But I also know that people who are mid to late phase financially may benefit from time away from the finance world. Heck I do it. If you’ve been reading here a while you’ll notice every so often you see a post pop up about travel, economics, or even rental cars. Sure I give these a personal finance twist to make them relevant to the blog, but that is my attempt at giving myself a break from the world of how to save more or invest more tax efficiently. This is before you even consider I write ahead so I may go a week or two between writing posts.
Take Time to Smell The Roses
The point here is remember to take some time away from finances, or whatever your passionately pursuing. You might find taking a break leads you to better long term performance thanks to being refreshed.
Now What for Full Time Finance
On that note, you may see a delay in response to comments during some portions of the month of November. I have a lot of those other hobbies and activities going on. Rest assured my posting schedule will remain at 2x a week and I will still respond to every comment.
How do you manage the long mid point between mastering the basics and achieving your goals? How do you answer, Now what?
So true, you need to take the time and smell the roses along the way to FIRE:) I am still a few years away from retirement and have been taking more time off work to enjoy the little things in life today. I have always worked long hours so this is a change for me but I don’t want to wait until I am ready to retire to do it all, there is no reason not to enjoy some of my hobbies or travel now. I took 2 weeks off in July to go to France with my kids and at the end of this month I am off for 2 weeks to Hawaii. A tiny little dent to my savings , totally worth it:) And I will be back even more motivated.
If you’ve got things under control why not. A life of deprivation is just going to result in a lack of motivation to keep going. Have a great time in Hawaii.
Your advice to “do something else” rings particularly true. There’s only so much that compulsively checking Personal Capital can do for your day to day. I recently moved the computer out of reach in an inconvenient location because my virtual friends and activities (catching up on blogs like your own, hanging out on the Rockstar Forum, blogging) had started to insidiously rob time from the actual people and activities.
Many FI bloggers relish the endless tinkering and optimizing as an outlet, a utility for our natural pathology.
Appreciate your taking time for the Now What!
Fondly,
CD
Thanks CD. I previously had similar issues with checking my brokerage accounts. I take advantage of the hurdle of 2 step authentication tied to a laptop I don’t access frequently. If you can’t just click a button and look it definitely helps.
I was actually laying in bed the other night thinking about this topic. It feels like when the boulder has been pushed up the mountain you think what’s next. There’s only so much more optimization you can do before it starts to become a detriment. So I don’t have any good answers as much as I’m trying to enjoy the ride at this point 🙂
MSM, Relax and enjoy the ride. I know its hard to do for those of us use to tinkering, but otherwise you are right it can be detrimental.
Prior to Mint & Personal Capital, I would calculate my portfolio value with Excel spreadsheets and it was a pain after dividend reimbursement or a buy/sell because I would have to update the quantities. I would only check & update at the end of the calendar month.
After registering with Mint & Personal Capital, I would check them daily (and wonder why they were slightly off). After a few months, the originality wore off I started checking less often. Now after 2 years with Mint & Personal Capital, I check them once a month at the end of the month…just like I did when I was using the spreadsheets.
I am a firm believer that at some point in life, a mentally stable person who is FI will begin to spend down their net worth. They can do this in many ways but I think it healthy to allow some sub-optimal spending in your life as the time & mental energy to achieve optimal conditions is worth less than the incremental savings. At some point, a mentally sound person will think “I don’t want to drive 8 miles to Costco, walk a half mile across the parking lot and wait 30 minutes in line to buy an oversize product. I’d rather walk two blocks to 7 Eleven and immediately buy a smaller package of the product even though it 25% more expensive by volume.”
I recall a saying that goes like “Money cannot buy happiness but it can buy conveniences which gives you more time to pursue happiness.” Super wealthy people don’t pick up their own dry cleaning or take their own cars to the garage for servicing. They have assistants and staff. They have people do it for them because their time is too valuable. That mentality should be scaled down for people who are FI. However, the opposite is frequently true in the blogosphere. The habits of parsimony and frugality are maintained throughout FI (and trumpeted as a virtue) when in reality they are simply the compulsions of stubborn men & women who are unwilling to reconsider their situations.
Once you etablish habits it’s hard to break them. You are right though. There comes a point where optimization is shooting yourself in the foot. It’s a balancing act.
They say one of the hardest things for FI retirees to handle is the transition from accumulating net worth to spending down net worth.
There is a subtle difference often overlooked among people in the FI community. Many people with blogs seem to confuse the means to an end. In other words, they value the frugality but forget that the purpose of frugality is to achieve FI. Once you are retired, you better be FI or you never will be. Anything beyond what you can spend is really wasted time & money. In other words, if you are going to spend $2 M in retirement, there is no reason to save $4 million. Certainly these are estimates and circumstances change and everyone wants a cushion. However, it appears some people with sufficient means are unnecessarily denying themselves conveniences & luxuries which would provide more value than the frugality tasks they would replace.
I witnessed this with my own parents. They never shifted out of accumulation phase and as a result lived a lifestyle in retirement well below what they could of afforded. In my father’s case, his unwillingness to spend money on taxis (his dementia worsened to the point that he could not remember how to get to the doctors office) and home nurses (he forgot to take his medication) contributed or accelerated his death..
I suspect some would argue they are saving to leave for their kids… but in general I agree with you. Frugality isn’t a badge of honor or a goal. It’s a tool on the way to a goal.
Once you get optimized yourself, figure out new ways to help other people do the same. I’m not sure if you have done this already. Maybe reach out to your audience to understand their unique money challenges and then do a post specifically on that topic. This way you can add value without producing the same general stuff over again.
We have to some extent, our last series was a direct response to some of our great commenters. We’re always open to new requests if anyone has any. Engaging others whether to help or to discuss is really my whole reason for blogging.
Do something else! Yes, that’s it. We want freedom right? So we finally get it, let’s do those things. I recently read an article about this that give us joy and one of them was to re-read a book you have read before that you really enjoyed. That’s exactly what I did last month and I still enjoyed it despite knowing what would happen in the end 🙂
Great Point SMM. Sometimes it’s the simple things that make all the difference. The key is to just find those things and do them.