On January 30, 2021 my grandfather, Segundo “Sig” Sanchez, passed away. He was 100 years old.
In many ways, grandpa lived a successful life. He enjoyed prosperous business and real estate endeavors. He also had a meaningful political career.
Financially speaking, you could probably describe my grandfather as rich. But I don’t think he lived his life with that focus in mind—at least not from my perspective as one of his grandchildren.
If you could have joined me on a visit to grandma and grandpa’s home back when both of them were alive, upon walking through their front door you would have been greeted with a smile, a hug, a “hello my friend” from grandpa, and maybe a kiss on the cheek from grandma. Looking around their living room, you would have taken in the dozens of photos lining practically every available inch of wall space. The faces looking back at you from the photographs were those of their children, grandchildren, and great-grandchildren.
I’m a financial advisor. I help people organize their financial lives. By doing so, I hope that they experience greater clarity, less worry, and an improved sense of direction. I also hope that the work I do saves my clients a whole lot of time so that they can focus on other things that bring them more satisfaction and fulfillment from life.
One of the downsides of my vocation is that I can become too focused on money and how to get more of it. I suppose it’s only natural to do so when so much of my time is spent talking with people about planning for the future—a future in which they’ll need to have saved a great deal in order to get by.
I don’t mean to say that money is “bad”—it’s important, after all. Achieving financial independence in a reasonable timeframe so that you can enjoy the latter years of life and not be a burden on your family or the state is a worthy endeavor. There are very real physical and psychological benefits to financial savviness. Financial peace comes from being debt-free, saving for retirement, having an emergency fund, and taking care of your estate planning, among other things.
Yet despite the many benefits of wealth, an unhealthy fixation on money may lead to missed opportunities to impact others, connect with those you love, and live in a manner that resonates with who you really are.
My thesis, therefore, isn’t that you shouldn’t care about money. Instead, I want you to keep money in its proper place and perspective.
In that spirit, I want to share a few ideas for how you can work toward achieving the delicate balance of being financially wise, while not succumbing to materialism.
We’ll start with some thoughts on how to get a better impression of who you are, and what you want from life. From there, we’ll review a few simple ideas that can go a long way toward helping you live your values today, while responsibly preparing for the future.
“Where there is no vision, the people perish” – Proverbs 29:18
I invite you to create a vision for your life.
This is an important step. You won’t know what to do until you have an understanding of where you want to go. There’s a reason why Stephen Covey’s The 7 Habits of Highly Effective People lists the second habit as “Begin with the end in mind”.
What do you want your life to be like? Will you do things differently than those before you?
How will you make sure to stay connected to those you love? Life is busy, after all, and if we aren’t intentional, we can very easily lose sight of what is important to us.
Write your vision down and refer to it often. Not sure what your life vision is? That’s okay. Start somewhere. Start anywhere.
Years ago, I began the process of determining what my vision was by simply opening a Google Doc and titling it “Vision”. Occasionally an idea would come to my mind for how I wanted to live. Sometimes the idea was to “maintain the right pace”. At other times the impressions came to “be thankful for all you have—do not ask for more”, and “you already have everything you will ever need”. Other notes I’ve written in my vision document include making mindfulness a regular practice in my life, taking my wife on a weekly date, and waiting at the bus stop with my kids in the morning. I also gain insight, from time to time, on what I really want from my professional career. I write those thoughts down and begin working toward them.
It doesn’t matter how you do it, but you need to start keeping track of what’s important to you. In this way, you’ll come to know who you are, and what you really want from life. Armed with that understanding, you’ll naturally begin to come up with ideas for how to do it.
But life is going to get busy, and you’ll have challenges arise. You’ll work too many shifts in a row, get into an argument with your spouse, or have a child with behavioral issues. Maybe you’ll deal with loneliness, depression, or the loss of a loved one. Perhaps you’ll have a trial of faith, an illness, or a professional setback. Maybe you’ll compare yourself to others and forget the path that you really want to be on.
Because we are all so prone to forgetting who we are and what we really want, it’s vital that you read your vision on a regular basis.
How will you remember to do this? For me, I’ve scheduled a weekly calendar reminder every Friday at the end of the day. I’m not perfect at reading my vision document every week, and sometimes “reading” is better described as skimming. Still, this simple commitment to recenter my life by regularly reflecting on my vision has helped me hold to my values and improve my decision-making process.
Incorporate a “Spending Plan”
Now let’s discuss some simple strategies that I believe can go a long way to helping you enjoy life today, while still preparing for the future.
Incorporating a “spending plan” is really just a nice way of saying that you need to budget. John Maxwell said that “a budget is telling your money where to go, instead of wondering where it went”. He was right.
A few years ago I wrote an article in which I argued that budgeting can help you build relationships. I still believe that’s the case.
But how do you go from no budget to regularly budgeting?
My wife and I struggled for some time when we first started trying to keep track of our spending. We scheduled a family budget meeting for Sunday evenings when the kids were in bed. When Sunday evening came around, however, it was just too easy to push it off.
Sometime later, it occurred to me that if I scheduled a monthly “Budgeting Date” with my wife, maybe that could be the catalyst that we (I) needed to better keep track of our finances. We decided that we would go out to eat and bring our budget (at that time a piece of paper where we wrote down our spending categories, money allocated per category, and each item of expense under the category) to see how we were doing and plan for the next month.
We’ve all got our thing. Some people love sports or shopping or hiking in the beauty of nature. I really love going out to eat. If I’m in the drive-through line of a fast-food restaurant specializing in burritos and tacos, I’m a happy man.
I’m telling you this because going out to eat was the positive association that we (I) needed to get us budgeting. The benefits of this were twofold: 1) My wife and I spent quality time together; and 2) the numbers got crunched while we crunched our spider rolls!
Call it what you want, you need to keep track of your saving and spending. Income is the engine that is going to power you to financial independence. It’s vital that you direct cash flows in the most prudent way possible.
It doesn’t really matter how you choose to go about doing this. Try a few things out and do what works for you. Some people will develop their own tracking systems on paper, in Excel, or Google Sheets, while others prefer a tool like GoodBudget or YNAB. Still, others will simply automate their target savings and live off the rest.
But if you’re having a hard time actually getting the budgeting done (on your own, or with your loved one), try scheduling a monthly budget meeting where you do something you love while you budget.
Give Yourself an Allowance
Sometimes people feel constrained by budgeting. They don’t like setting limits on their spending.
A few years ago, a friend of mine was completing his radiology fellowship at one of the local hospitals. He and his wife are pretty savvy. I was impressed one evening when I overheard them discussing their “allowance”. Evidently, they had decided that it was a good idea for each of them to have a little money every month to use however they saw fit.
This idea immediately resonated with me and I’ve been incorporating it into our budget ever since.
For those reading this blog who are already financially established, it might seem silly to give yourself an allowance. But for those who are in residency, fellowship, or who are early attendings with large student loan burdens, this simple budget line item can be the sustaining nectar that gets you through many years of frugality.
Speaking personally, there’s something freeing about having a little money to spend on whatever you want. So whether you save it up for a few months to purchase something “expensive” (however you define that), or blow it all on Taco Bell, there shouldn’t be any judgment from yourself or your significant other.
For those of you suffering through a tight budget, hang in there. It will pay off in the end. If your budget allows, even a small allowance will help sustain you.
Implement an “Additional Savings Policy”
I have a master’s degree in advanced financial planning with a concentration in taxation. I’ve spent extensive time in the tax code and other areas of technical planning. But one of the most important lessons my program taught me was the simple idea of recommending that clients implement an “additional savings policy.”
What is an “additional savings policy”? An additional savings policy is a predetermined decision to save a certain percentage of any additional money that comes your way.
For example, my wife and I implement a 50% additional savings policy. This means whenever our income increases, at least 50% of it goes towards increasing our monthly savings. For you, an increase in income might include a raise, money made from moonlighting, inheritance, bonus, stimulus check, gift, etc.
You might use this policy to help you build up your emergency fund, pay off debt, or save for retirement.
The beauty of the additional savings policy is that it systematically helps you increase your savings over time, while also allowing you to enjoy some lifestyle benefits from the additional money. For example, if you receive a $10,000 bonus, it will feel pretty good putting half of it into an investment account for retirement, while enjoying the remaining half to go on an adventure with family or friends.
While my wife and I use 50% as the percentage for additional savings, you are free to come up with something that works for you. Maybe 50% is too high, or too low. Determine an amount that you can enjoy in your plan.
Systematize Giving and Pay It Forward
Many of those reading this blog make giving a regular part of their life. For those of you who tithe to your church, you understand this well.
Imagine if you gave a small sum, perhaps $20, $50, or $100 per month in an anonymous way to those around you who were in need. Imagine the powerful impact that you could have in the lives of others.
Consider creating a plan to make giving a regular part of your life. Time is also extremely valuable, so perhaps your regular giving comes in the form of volunteer work for a cause that you believe in.
Don’t Let Money Become the Center of Your Life
This morning I was reading in the book of Luke, chapter 16, verse 13. There it reads, “Ye cannot serve God and mammon”. My version has two translations below the verse that interpret mammon as “gold” and “the power of money”.
From a spiritual standpoint, you might reason that while money is important, God is vital. Even if you’re not spiritually inclined, it’s not hard to see that setting your life on riches isn’t likely to make life rich.
Don’t let money become the center of your life. As you invest your money, be sure to invest in those you love. Spend meaningful time with family and friends. Deep pockets are nice, but deep relationships are better.
Instinctively we know that building a life based on the accumulation of wealth and material possessions won’t lead to a life full of meaning. Yet, if we are not careful, too many of us will fall for the lie that we live to chase after the next dollar or thing.
Create a vision for yourself and review it often. Establish a spending plan. Incorporate an additional savings policy, and create a system for giving.
It is my hope that these simple steps will point you in the right direction so that even if you should live to be 100, like Grandpa Sig, you will look back on your journey and know that you are truly rich.
What financial practices have you implemented that help you live your best life? Have you tried any of these suggestions? Comment below!
The content provided is for informational purposes only and represents my personal opinions based on my experience, study, and practice. Yes, I’m a financial advisor, but this article isn’t intended as advice for you specifically. Your unique situation needs to be taken into account, and the ideas presented here may not apply.
Please make sure you do your due diligence before implementing anything. Due diligence includes hiring a qualified professional who understands your situation completely and can offer you personalized advice.
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