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?