Viewing entries tagged
proactive

Inaction vs. Wrong Action

I can't take responsibility or credit for the title of this blog post. 

So let's give credit where credit is due. 

Inaction leads to failure more often than wrong action.
— Morgan Newman at Inc.'s GrowCo Conference

No matter what it was that lead to Mr. Newman's profound perception, the application of his perception to Wealth Management is unmistakable. 

To be sure, there are many people who have justified their inaction by telling themselves and others, that their inaction is a direct attempt to avoid the wrong action. 

It's not true...you can make a mistake by doing nothing, simply because doing nothing is an active decision whether you think it is or not. 

You know what else is not true?

  • There'll alway be time
  • The best is yet to come
  • That'll never happen to you
  • You did it once you can do it again
  • Build a better mouse trap and they will come
  • It won't look anything like that when you get there
  • It won't matter anyway
  • It's never too late to start

Should we go on?  Hardly. 

Waiting to get it "just right" most likely means that what you've gotten just right is your ability to get it mostly wrong. 


The Horse and The Wagon

As you know by now, there are a few blogs from others that I read regularly. Zenhabits, Seth Godin and Leaderhip Freak to name a few.  Many of these inspire me and inspire my own blogging efforts.

In Leadership Freak this week, Dan Rockwell was writing about how to overcome the pipe dream problem when I found two of his post comments intriguing and particularly adroit.

  • "Your dreams are doomed if the horses in the barn can't pull the wagon." (love that one actually)
  • "Can you name an aspect of your business that strategy or talent won't address?"

I think that there are two important lessons here and yes, to a great extent they apply to planning your finances, but they don't pertain to that alone. They apply to your life, your business, your relationships as well.

If the horses can't pull the wagon you're in trouble. If your income and your assets can't pay your freight in retirement or for funding a goal you're doomed as well. What most people know is [a] they have horses of some ilk and [b] they have a wagon. That's about it. They pretty much figure that they'll figure out the whole "can they pull it" thing when it comes just about to the point where pulling it is the only thing left to do. If that's the case and the trusty steeds can't cut it, you're pretty much up a well known creek without an appropriate mode of transportation.

Can you name the aspect of your financial life that either talent or strategy won't address? Gosh I hope not.

This whole personal financial thing is no where near as hard as it seems. As Nike said, "Just Do It."

Yeah, it takes time and effort but if you can work 40, 50 or more hours a week earning the money, can't you spend 10 hours a year optimizing it and putting it to work in the right ways? You can outsource the talent search and collaborate on strategy. 

As Seth Godin said in his blog on October 17th, we're adept at creating our own emergencies because as Seth noted.."emergencies concentrate the mind and allow things to get done." But operating from emergency mode is seldom either well thought out or optimal. 

Back against the wall planning isn't an advantage.

Which Lever Do You Pull?

My colleague Carl Richards at Behavior Gap has it just right in his video blog this month.

There are literally a host of things that we can do to improve our financial lot in life. We can spend less. And we can save more. We can continue to work past our retirement date which has it's own benefits, more income contributed towards goals and your contribution to the workforce is increasingly being shown as both needed and a benefit to your long-term health.  

There are literally a host of things that we can do to improve our financial lot in life. We can spend less. And we can save more. We can continue to work past our retirement date which has it's own benefits, more income contributed towards goals and your contribution to the workforce is increasingly being shown as both needed and a benefit to your long-term health.  

It's the things that you can control that count. 

It's the things that you can control that count. 

We can down size our homes, or take smaller vacations. We can carefully consider college costs and opt for high quality schools and our own ability to guide our kids as opposed to Ivy League schools and student loans. 

Why then, as Carl suggests, do we always focus on investment returns as the central issue to concern ourselves with? 

I'd suggest that it's easier for us to focus on the thing we can't control because we don't have judge ourselves if it fails. It's long been known that investors tend to pat themselves on the back for good investment decisions when markets pan out and to blame some nefarious other factor when they don't, be it Europe, the Fed or the current administration. 

As I wrote last week, we have an aversion to taking control of things. Pulling the other levers as Carl refers to it, takes more thought and places the responsibility on us and it will be squarely in our path. That's harder than surrendering to what you can't control. 

Imagine telling your son or daughter that they can't go to Brown University because you simply can't afford it after the 2008 market and the summer swoon of 2011. Not your fault, the market took that money from you, you didn't lose it. That's a lot harder than deciding to work till age 70 or just sitting your kid down and saying; "we don't think that Brown is a necessary expense. You can do just as well at a smaller school with more focus and working harder." That's not a subtle shift in the conversation. 

Knowing that your focus should be controlling what you can control isn't new, but for many it's almost impossible. Until we can resolve that without planning you can't know what to control...you'll continue to avoid it. 

The "doing/knowing" gap suggests that in many instances, knowing that something should be done is the equivalent of actually having done it. (Can't tell you how many married couples with kids I've talked to over thirty years that know that they should have a Will done and yet, after 13 years of marriage, don't have one.) 

We can finish on this note: doing/knowing will seem like the same thing, until it's not. And when that happens, you won't know what levers to pull, when to pull them or why. 

Save yourself the trouble and start making active decisions now, while you have both the time and space to consider their implications. Setting a course, a real course, has to be the first step in the process unless ignoring how you get somewhere is the way to go. 

Deciding where to end up is never hard. Knowing how to get there is, but doesn't have to be.