Recapping 2012 Part 7 of 7

2012 TimelineWell here it is, the end, the last day of 2012, and this is my last post looking back at the year. My next post will be looking forward. It’s important to know and understand the past but that’s only so you can plan your future. Going into 2013 I thought this post would be a good reminder that every decision you make has consequences so the sooner you make good decisions the better off you’ll be. Looking ahead means projecting several outcomes from each decision and deciding which is the most likely and which will serve you best. Here’s to taking the right combination of paths in 2013!

Action and Reaction

Early in our school lives we all learn about Issac Newton and his apple mishap that led to his theory of gravity. Well Newton also had some laws of motion and his third law of motion loosely states that for every action there is an equal and opposite reaction. Welcome to world of consequences. For every choice you make there is a choice (or several) that you did not make and every decision leads to a result, good or bad.

Consequences start at a young age. Things you have control over but often don’t have the maturity to appreciate, like the importance of good grades, for example. Once we move on to the next level in life we choose our major in college or career in life, and we would do well to choose wisely. How many people are willing to go into debt for an education that may not provide the means to easily pay back that debt? That one decision will have ripple effects throughout life.

How many people delay investing in their retirement accounts early in their working lives because they think they can’t afford it, because it will negatively affect their lifestyle? The fact is that their lifestyle will be much more adversely affected in old age if they wait too long. It’s not that they can’t afford it now, it’s that they won’t be able to afford it later.

Taking a What Next approach to decision making is to weigh as many options as feasible, and to choose carefully. Asking What Next means you have a long term outlook and understand the ramifications decisions have. In financial planning terms that means understanding the future value of a decision. Put simply, the future value of a dollar invested today at 10% interest is $1.10 one year later. The future value of not going into debt to fund your education is the ability to start saving earlier and building your retirement nest egg sooner.

I don’t have children but I think I might have spent more time talking about the consequences of that decision with Julie, than most people who do have children. I’m not sure I can think of a weightier decision than the choice to have children and yet I wonder how many people treat it with the reverence it deserves.

The everyday choices we face today will affect the life we have later. Buying a house, a car, toys, taking lavish vacations, all diminish your ability to save for the future. Whether you stay in your home for a long time or move frequently, whether you buy a new car every couple of years or hang onto it for a decade, will determine your level of success. It is a balance between now and then.

The question for you is, are you well balanced? (I know what some people say about me – so let the jokes begin) Do you have a long term outlook on life? Are you confident that your choices today will still look correct a year or five years from now?

Share some examples of long term decisions that have paid off for you and some that didn’t.

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The Unbearable Lightness of Goals

Don’t think of goals as just a few key plans for the future. There’s more to goals than that, they are more versatile than that.

DartboardThere isn’t just one kind of goal, or two, or three, there is an unlimited range of goals. Some goals are short term while others are long term, some can be modified some can’t, some may be discarded entirely, some are more wish than goal. The goals you thought were rigid sometimes turn out to be quite pliable and visa versa. You get the point.

The key is flexibility, the willingness to modify one goal to achieve another more important one. As new information is learned what you never imagined before suddenly becomes a requirement. That’s life, that’s what asking What Next is all about, the search for adventure through exploration and discovery.

Career goals intersect with life goals, without one can there be the other? I write about this in the book What Next as I chronicle my attempt to change my career from television news to financial planning. This is an example of a pliable goal. I wanted to go into financial planning but I wanted to do it on my terms, and if that wasn’t possible, then I knew I would continue in my current career.

Writing the book is similar. I didn’t write the book to make money. On the contrary, I can afford to spend money to write the book, that’s why I wrote it, to demonstrate the options success gives you. I was able to pursue a creative outlet without worrying how I would pay for it or if it could sustain itself. For me it was writing a book, for someone else it might be painting or woodwork. 

Flexibility and options are integral parts of What Next. The choices you make will either expand your options or limit them, it’s up to you.

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