20: What Do You Want?
If you’re in a position to save money, and you’re either starting out as a new investor or have been investing for a long time, this episode is for you.
My friends, we did it. This is the last episode of Season One, and after today I’m taking a good long break to work on the next season of this little podcast.
But before we’re done, we’re going to talk about the single most important ingredient in finance: you and what you want.
Most of us want very similar things: for tomorrow to be better than today. To keep the roof over our heads and food on the table. To survive.
If your basic needs are being met, and you have more than you need to get by, you have the luxury of deciding what to do with that extra money.
We’ve talked about the basics of investing before, specifically in episodes five, six, and nineteen, but this is about why you do it. Most importantly, it’s about what you want your life to be like in the future.
This is important, because–as the saying goes–you can have anything, but you can’t have everything. You have to decide what you want, and you have to decide what you’re willing (or not willing) to do to get it.
This isn’t SMART
What this isn’t is an exercise in SMART goal setting (If you haven’t heard of SMART, it stands for goals that are Specific, Measurable, Achievable, Relevant, and Time-bound, and plenty of people have spilled plenty of ink on them already).
In finance, SMART goals ask you to set a price and a date for what you want to spend money on. Usually, the suggested goals include things like:
A house
A car
Paying off debt
Going on vacation
Paying for your kids education
Retirement at age X with the ability to spend X per year
In real life, you don’t just want things. You want how those things make you feel, both while you’re working towards them and once you get them. You want a sense of purpose, a feeling of contentment with how things are going, and an overall sense of rightness.
You know, all that stuff that doesn’t have a price tag you can check.
Making a List and Checking it Twice
As usual, it’s helpful to make a list. Even though I’m inviting you to think beyond a list of things you want to buy, starting there is an easy first step.
So, for example, if you want to buy a house, put it on the list. But also include why you want to buy a house.
If you want to pay for your kids to go to post-secondary school, add that to the list, along with why you want to do this for them.
How will having the things on your list make you feel? What else could make you feel that way?
Move on to harder things: what kind of life do you want to live? How do you want to spend your time? What’s stopping you from doing that? What do you need to make it happen?
On the flip side, what kind of life do you not want to live? What are the things you’re not willing to do to get the things you want? What obligations do you have now that would make your life and material conditions better if you didn’t have them? Why?
Last, pit the things on your list against each other. Pair them all up, in every combination. For each pair, which one would you give up if you could only have one?
From Theoretical to Practical
Investing in this activity even once can be illuminating, but making it a regular habit can be life changing. Having clarity about what you really, really want (or don’t want) helps you make good decisions when you’re faced with them, even if everything on the menu is kind of mediocre.
I’ve worked with thousands of people in my career as an advice only financial planner, and the people who get the most out of planning are the ones who put the most work into identifying what’s important to them - not just their goals, but their values.
Financial planning (whether you do it yourself or someone helps you) can model what on your list is possible, and what needs to change to make the things that aren’t possible right now happen in the future.
What it can’t do is tell you what you want.
You’ve got to do that for yourself.