‘Look Ahead’
When you observe people you can see some who are ‘living in the past’, some are ‘living in the present’, and others ‘living for the future’. In general, healthy individuals do some of each. You can see that some investors who dwell in the past (remember the last market crash) miss out on opportunities because they can’t move forward. They remain paralyzed due to fear of more losses. I have seen this with people who lived through the Depression as well as the children of those who lived through the Depression. We see a more current example of those who got burned during the ‘tech wreck’ and the ‘financial crisis’.
We see too many ‘living in the present’ only. Those ‘live for today’ and tend to spend freely and want things now. They may borrow (or take on credit card debt) to enjoy today and are not as concerned about tomorrow, when you have to pay off your debt. Sometimes people take on risky behavior to enjoy today. They fail to consider future consequences of their actions today. Such consequences may include too much debt, too little savings, and too little in retirement savings.
Lastly, there are some who are focused only on the future. They tend to save and invest for a future time, such as retirement, but miss out on enjoying today. How many times do we hear about people ‘planning to do this or that in retirement’ but end up passing on too soon to enjoy the fruits of their labor? For others, their health deteriorates where they may have the money, but not the stamina nor mobility to fulfill their dreams and plans.
‘Take Charge of Your Money!’ is about learning from the past, living for today and planning/saving for tomorrow (the future). When you think about it, you have only so many choices. You can figure out ways to increase your income, cut and reduce your expenses, increase your savings, and invest for a higher return. You hear the old saying, ‘pay yourself first’, which means set up automatic withdrawals out of your paycheck into a tax-advantaged retirement plan (such as 401(k) and IRA) or an after-tax money market account (for forced savings). One example is to ‘live below or within your means’ which is to spend less than you earn and save the rest. This is where wealth creation begins.
In summary, I’ve seen too many clients and prospects only ‘living for today’. They don’t have enough emergency savings (typically recommended 3-6 mos. income) nor savings for future use (retirement). Many don’t have estate plans (such as a basic will or living trust) or life insurance (if they have a spouse or children). Even if you have limited resources, a basic will and term life insurance are inexpensive. Putting some money away for a rainy day may be difficult but very necessary. Even a small amount is better than nothing!
Confucius said ‘a journey of a thousand miles begins with a single step’.