By Brad Thomason, CPA
I think that in the modern world, among thoughtful persons, the notions ‘money isn’t everything’ and ‘you can’t buy happiness’ are accepted as truisms.
At the same time I think it is brutally true that if a person is having money troubles the odds are very high that it will spill over into other areas of life and make it much harder to realize much sustained/uninterrupted joy.
So that’s sort of a paradox.
Here’s another. Most people think nothing at all of spending forty or fifty hours a week for forty years to be able to pay the bills that come rolling in every month. Yet they balk at the idea of having to spend extra time setting the stage to be able to do nothing once they retire. It’s as if the simple passage of years is supposed to magically take care of all of their needs for two or three decades (or more) after they decide to hang up their spurs. Or perhaps, they put in their forty at the office, so it isn’t right that they should be asked to put in any more time/effort/thought as payment for some far-distant future benefit.
That has always seemed like a mismatch to me, too.
Well, we live in a world of paradoxes, and being upset by their mere presence or investing great efforts to attempt to resolve the unresolvable isn’t going to be anyone’s first, best use of time.
But I will tell you this. I’ve noticed that most of the people who end up doing well financially in retirement get there via one of three paths:
1. Those who accepted a lower salary during their working years in exchange for old-style retirement benefits. Folks like school teachers, government workers, etc.
2. Those who engaged in some sort of active money making, and did well with it. This would include business owners, professionals who have their own practice, and what you might think of as active investors like traders, real estate developers, and so forth. Notably, these people make a lot more money than the average person; and in the really successful cases, manage to keep their living expenses from growing at the same rate as their revenue.
3. Those who are extremely diligent at being financially responsible, across the broad spectrum of variables, their entire adult life, and who pile up a win one grain of sand at a time over a period of decades.
There are other paths to the goal than just these three. But in my experience, these three are the most common.
What I think is significant about all of these is that they inherently require aspects of extra effort, or sacrifice or both. These people did not get into the win column by accident, nor did they get there without paying a price. They might not have gone so far as to make their entire existence about amassing wealth and nothing else. But neither did they ignore it or act on any feelings of being slighted at having to make some sort of investment.
Whether they meant to or not, these folks found a way to take up a middle position within the paradox. They did not let money become everything. But neither did they lose sight of the fact that money troubles can foster far-reaching pain, and as such, are worth making an effort to prevent.
On all fronts, those are good examples to follow.
Older blogs (2015-2017)