There are a lot of absolutes being thrown around the personal finance world:
Avoid paying off debt so you can put money into investments.
Avoid investing until you can pay off debt.
Don’t worry about retirement until you’re debt-free.
Start saving for retirement yesterday.
And so the list goes.
No matter what financial question you have, there will be at least two experts telling you opposite ways to solve your problem – and both will say that their way is right.
Here’s the thing: there’s no right or wrong way to do things in personal finance. What makes sense for you won’t necessarily make sense for me. Why? Because even if our balance sheets look the same, our circumstances do not. When it comes to taking financial advice, the best thing to do is focus on what makes the most sense for your finances and finding the balance within that.
So, if you really want to have your personal finance questions answered, then what you need to do is seek wisdom and seek balance.
“Wisdom” in this context doesn’t mean answering the world’s most philosophical problems. When I say to seek, “wisdom,” I mean do what makes sense.
If you’re trying to pay off your student loans but don’t have an emergency fund, it might make sense for you to save up for that fund before you pay extra on your monthly debt payments.
If you’re thinking of investing but you need credit cards to cover your monthly expenses, then it might make sense to re-balance your budget before you decide to invest.
If you’re thinking of taking on more debt for a home or a car or whatever else but you live paycheck to paycheck, it might make sense to reconsider that purchase until you can find a way to earn more money or cut something from your budget.
Doing things that make sense means not following simple advice like, “pay off all debt as soon as possible” or “start investing yesterday” and instead focusing on what simply, logically makes sense for your life. It means taking your circumstances into account and allowing for solutions that make room for growth. It means never blindly following advice.
If you keep wisdom in mind, you won’t get all the answers you need at the click of a button, but you will be more likely to make decisions you won’t regret later.
After you’ve sought out the solutions that make sense for you, then it’s time to find balance.
The reason balance is so important is because most financial issues can’t be solved overnight. Just like trying to eat healthy or get in shape, creating financial change requires daily work and often a full-on lifestyle adjustment. And the only way to sustainably do that is through balance.
If you throw yourself into a crash diet, you’ll probably end up bingeing. If you decide to never spend another dime until you have a certain amount of money saved up, then you’re probably going to falter quickly. And the worst part of these falls off the wagon? They make you feel like it didn’t work. They make you feel like change isn’t possible. They make you feel like it’s too hard to reach your goals.
False. False. And false.
If you seek change without balance, then it will be too hard to reach your goals. Life is complex and there has to be room for all the things we’re trying to do. As nice as focus is, blind focus can equal the death of long-term goals. Creating a plan that’s too aggressive could be setting yourself up for failure and, ultimately, a feeling of defeat. Failure is something anyone can come back from. Feeling defeated is much, much harder to recover from.
Don’t defeat yourself out of the gate. Implement tools and strategies that take into account the natural need for balance. Give yourself room for some of the things you enjoy (just not all of the things). Find ways to reach your financial goals that are actually sustainable by leaving room for your other goals as well. And then focus, focus, focus on the plan you create.
If you’re not sure how to find balance, you can do so by questioning your choices thoroughly:
Does this solution help me in the long run? Or does it focus on an immediate desire?
Does this solution address my biggest financial pain point?
Does this solution allow room for financial growth? Or does it place an unnecessary squeeze on my finances?
Always ask questions. Never blindly follow advice. Then you can find balance.
You Know Better than You Think (AKA Trust Yourself)
When we’re caught up in an un-ideal financial situation, we tend to think that there’s no way out. Fear and anxiety prevent us from realizing that we know better than we think.
Sure, sometimes we need some guidance. You may not know that making debt payments biweekly instead of monthly can help you pay off debt faster. Or that saving a little bit of money for retirement each month now will have more impact in the long run than doubling your monthly savings contributions later. These tips and tools are the kinds of things that we need to seek out when we’re looking to solve our financial issues.
But that’s just the first step. From there, you can apply the tips and tools to your life to decide which to follow and which to ignore. You do have the knowledge you need – it’s called your gut. Your instincts will tell you if you’re encountering a solution or tripping on a potential landmine. You simply have to quiet the anxiety so you can actually hear yourself. Seek wisdom, seek balance, and trust yourself. This is how you can reach financial success.
Image Credit: Graeme Maclean