During the past five years I have learned a very valuable lesson in regards to money, financial success won’t happen unless you plan for it. Much like living beneath your means and saving for the future, it is important to plan out your goals so that you know exactly what it is that you want to receive from your money, as no one cares as much about yourself and your goals as you do.
The average working American spends 40 or more hours of their week trying to earn a living, although sometimes it feels like a whole lot more. If we were to subtract two weeks for vacation time, that’s about 2000 hours worked per year. Given that so much time goes into earning money, you would think that we would spend more time planning how we want it to be allocated. Many of us, myself included, would rather choose entertainment and relaxing over planning out our financial future.
There is nothing wrong with watching sports, playing video games, catching a movie or other forms of entertainment. They play an important part in our well-being. However, we cannot forget that it is important to actually plan out our financial moves in advance.
The Non-planner
I’ll admit that until recently I have been a poor financial planner. I knew that I wanted to become debt free, but I didn’t have a real solid plan. The short version of my quest for financial independence is that my wife and I bought our house a few years ago. The inspector told us that we’d need a new roof within five years so we need to plan on purchasing one. During the next five years we focused almost entirely on paying off our credit card debt as quickly as possible. When we had about 30% of our debt left to pay off guess what happened. Yep, the roof started leaking almost on cue. We didn’t plan for it and had no way to pay for it other than through credit. So we went back into debt and pretty much had to start over. In short I felt like a financial failure and gave up for a period of time.
Use a Map Not GPS
If my financial path was an actual road, I would say that my wife and I were using GPS and not a map. I love my GPS devices. We rarely have to plan our routes and getting lost is almost impossible. But there are two things that a map gives you that GPS doesn’t do quite so well. First, maps allow you to see the big picture while GPS only gives you the route in small segments. You may know to turn left in 2.5 miles, but it doesn’t easily tell you what’s after that. Second, if there is a detour or traffic congestion, it can be difficult for the GPS to calculate a new route that makes sense.
While my wife and I were paying down our debt we weren’t using a map. We didn’t see the big picture or even know where the destination was. All we knew was that our debt would be paid off within a certain period and then our financial GPS would tell us where to go next. However, our roof began leaking and that threw our short-term plan off and we didn’t know how to handle it.
If we had planned out our finances, my wife and I would have realized that we needed to increase our income to pay off debt and buy a new roof. But since we were focused on paying off debt, the thought never occurred to us.
They Make it Look Easy
Planners make building wealth look easy. Look at Pauline. She lives on a lake in her own Guatemalan paradise. She invests in cattle, real estate, a coconut farm and runs a personal finance blog. If you’d never read her blog, you may think that she just woke up one day in paradise.
But you’d be wrong. Pauline planned out her financial moves. She chose Guatemala over a country with a more expensive standard of living. She researched unconventional forms of investments and chose the ones that best fit in her plan.
A few days ago I asked my readers what their financial path would look like. Pauline responded with,
“My financial path would be a watery one. The river was dry so I had to paddle hard to progress, then there was more and more water and it was like rafting in crazy waters, and now I am on a quiet and peaceful lake at last.”
Pauline may have woke up in a beautiful serene lake, but only after working her butt off. When we see the wealth of a financially independent person it can be easy to think that there is nothing to it. But we often only see the end results. The hard work and sweat that was put into it is often lost in the background. So the next time you find yourself thinking that the wealthy have it easy, remember all of the work, sacrifices, and planning that they put themselves through.
 Are you planning for financial success?
Yes I am planning for financial success. I believe on proper financial planning in order to monitor your financial journey. I am sure financial success can be achieve if you have a plan how to do it or how to achieve it.
I agree. Your chances of financial independence are much greater if you plan ahead and look at the picture as a whole.
Thanks Justin. Absolutely true, you will only have a clear pictures of your financial being if you will plan it ahead.
I agree. You’ve got to have a long term plan mapped out about where you’re trying to go. I’ve only got my financial goals mapped out to reaching financial independence. As for what I’m going to do after that I’m not sure. Basically the map just says “Here be dragons.”
I think that once you reach financial independence you can worry less about planning, unless you have a certain goal that you would like to obtain. Such as having a net worth of $XXX.XX amount.
Justin, GREAT post. Love the GPS/Map analogy – it’s spot on! We are in a similar situation to yours, just working on getting out of debt, and knowing we’ll likely need a new roof this year. Thanks to your story, we are both paying off our debt and putting money aside for the roof expense. Thank you!
Laurie, I’m glad that you’re saving for a roof replacement while you’re paying down your debt. This is something that I wish that we had done when we first bought the house.
this was a very motivational reading for me! I realise that I need to set up some more goals for myself and my financial well being.
I’m glad that you found the post helpful Norwegian Girl. I’ve still got a ways to go myself. My goals are aimed for the end of this year, but I’m continuing to push them further out.
It is important to create a path to financial freedom predicated upon ones specific, unique skill set. If you are horrible with numbers playing the stock market may be a questionable choice; but if you are a tremendous artist perhaps there is something in there you can leverage, such as learning and doing graphic design on the side. Play the games you are good at!
That is a good point Snark. Leveraging your skills that are unique to you can be a terrific way to find a path to financial independence.
Love this post 🙂 We are definitely planning for financial success and have been doing many things to map our future out.
Thank you Michelle. I must admit that you’ve been one of the big driving forces behind my new found financial zeal.
“financial success won’t happen unless you plan for it.” I could not agree more Justin! We spend (generally) so much time trying to make money that it makes absolutely no sense to not have some sort of plan for it. Otherwise, we’re just opening ourselves up to failure. Love the Map/GPS analogy…it’s dead on!
Thanks John. I agree that we tend to spend the other half of our time spending what we’ve earned instead of saving it so that we don’t have to work as hard.
I am definitely planning for financial success, and I would agree that for a large majority of individuals financial success does not happen unless you plan for it. Unfortunately some people find success in their careers and make gobs of money, but mismanagement leads them to bankruptcy. The football player Warren Sapp comes to mind.
So true, like MC Hammer for example. They make all of this money but don’t look any further than the here and now.
How true that we see well off people and just assume they had it easy or had family money when probably they were just smarter and better planners than the rest of us. I hope to be in that camp in 10-12 years. If you don’t plan for it, it certainly won’t happen by accident.
We see the end result of all of those years of hard work. It’s easy to think that they have it good, but we don’t see the sweat and tears put into it.
Love the GPS metaphor! I’m all about the big picture, and I’m always figuring out more ways to set myself up for future success.
It’s important to think about the big picture. Focusing on the details can make you lose sight of what it is you’re trying to achieve.
Great post! It is hard to believe that we all work so many hours yet so very few of us make a plan for the money we earn. It’s definitely something to think about!
It’s pretty insane really. We work and work and work, but never think about how to plan what it is that we want to do with it all.
If you fail to plan then you’re planning to fail. Pauline’s situation is a great example of what a bit of discipline, patience, and planning can do. I have my itinerary set for financial success as well, although a different path than others, but I suppose that’s what makes us individuals 😀
It’s important to find the path that works for you. Many of my co-workers think some of my ideas are out there, but they’ve saved us money without too much pain.
Great analogy with the GPS. When I moved, I wanted to see which Chase was nearest to my new address. The navigation app on my phone could only tell me how to get to one that I chose. I needed the map app to show me where each one was so I could eyeball who was closest.
Thanks Edward. GPS is a great tool, but to get to where we’re going sometimes we need more information that we have. Maps, on the other hand, show us the big picture, but require some thinking.
I love your map/gps analogy. It is so true. When you’re planning your financial future you have to look at the big picture. My father taught me about money which led me to a career as a financial advisor. So financial freedom was the goal from the moment I stepped out into the world on my own. I am happy to report that it feels wonderful, but I still use a map to plot my course and make very smart choices with my money — those things will never go away. Great post Justin!
You’re fortunate that your father thought it was important to teach you about money. So many people have to blindly feel their way to get ahead financially. By learning at such a young age you really had a head start on the rest of us. And now you’re helping a new generation learn financial responsibility.
We are definitely planning out our financial future and want to be successful. There is so much we want, and we won’t get anywhere by not planning it out!
I agree. If we just buy what we want when the fancy arises, we’ll end up further behind and be unable to achieve all of the goals that we wanted to accomplish.
You certainly can’t understate the importance of understanding where you want to be. Whether it is an early retirement, or simply improving your financial house, the “turn-by-turn” directions will fall into place once you have the end goal in mind. Great post Justin!
Good point. Once you start finding out where you want to go finding the small things becomes easier because you’re tuned into finding what you need.
I really like the GPS vs Map analogy. I’ve tried to explain why I think GPS’s make us worse drivers, and that’s what I mean. We don’t need financial advisers to tell us the next move, we need financial advisers to help us with the next 60 moves. Then more folks would be prepared for retirement/early retirement.
Your thought on GPS reminds me of an episode of The Office. They were driving and it told them to turn right, but on their right was nothing but a lake. They ended up listening to the GPS and ended up sinking in three foot of water.
I understand your struggle with planning. I had the same exact problem, actually I still have that problem to create a working plan and then follow it. Still didn’t figure out how to tame myself to my plan.
This is something that needs to be taught in school. We’re taught who founded ancient Empires, how to calculate the speed of light, but never learn very many everyday concepts that can be used to further our humanity.
I am definitely planning for financial success and going through some rough patches. I will get through it and be stronger when I get out.
It’s much easier to make it through rough patches when you have a plan than when you’re blindly flailing around searching for your way.
Yes, planning is so very key here. And the more one has effed-up their finances, the more planning it will take to get out of the hole. We began serious planning in spring 2012 and are doing well, but it will be 2015 before we complete our plans.
That day in 2015 will be one that you’ll never forget. I hope that I’ll be in a similar situation when you achieve your goal.
Abso-freakin’-lutely! Thanks Plauline:)
Good story Justin, Someday I may have to document where I have failed and occasionally stepped off the path. It may help me stay on the path going forward. Making a failure public takes a great deal of courage, but I think it helps in not repeating your mistakes.
It take courage to admit where one has gone wrong. However, it’s also important for others to learn from our mistakes. I plan on posting more of my mistakes in hopes that other avoid my mistakes.