The Finish Line is the Start Line

In the past, you have probably heard me say it is important to know where you are today financially and where you want to be in the future. That has been my own way of simplifying the financial planning #process and filtering down all the complexities to one variable. Closing the gap between today and your future from a savings capital requirement. In other words, knowing how much you need to save today in order to have the lifestyle you want in the future.

I have always thought the most important step in the #financial #planning process was step number one – identifying your individual starting point. It turns out I was wrong and that your starting point is not where you are today financially but rather where you want to be in the future. The finish line is the starting line.

It turns out I was wrong and that your starting point is not where you are today financially but rather where you want to be in the future. The finish line is the starting line.

Now before you think I walked into the twilight zone please hear me out. 

If I were to identify your starting point as your finish line what I am essentially doing is reversing the financial planning process order. For example, instead of starting with your future #cashflow needs followed by analyzing your existing assets and savings habits then applying a reasonable average investment #growth rate of return, we would reach a point where we would identify the projected amount of money you would need to have in the future. Make sense?

If I was to use today as your starting point what I am unintentionally implying is that you will no longer grow personally or learn from any future mistakes that would likely help you become a better version of yourself. Most people who reach a traditional retirement age always seem to think back 30 years and identify moments in their life where they could have done things differently. “If only I saved more, if only I bought XYZ stock, divorced, loss of a loved one, #sick parent, #career change…”

By using today as your starting point, we are removing all life changing events that would have contributed significantly to your maturity as an adult, #investor, #parent, and #sibling. Instead, we are applying a hypothetical scenario all based on the assumption that you have figured everything out in life at the time of constructing your personalized financial plan. Do you now see the fundamental flaw by using today as your starting point?

What is this week’s takeaway?

The most important aspect of a personalized financial plan is not just about the data or your financial goals you have in mind today. It is about hope and having #faith in yourself that you will not just grow your financial assets over the next 30 years, but you will also grow as an individual through the stress tests of life that is waiting for you.

Using your finish line as your starting point means you accept the idea you have not finished growing personally. Instead of knowing how much money you will need to retire in the #future you are now focusing your energy of what future version of yourself will you be most proud of. Only from this point would traditional planning now come back into the picture.

By reverse engineering the financial planning process and using your #starting point as your finish line, we will not only become better investors over time but also better human beings.

Happy Father’s Day and have a great weekend everyone!

Talk soon,

Michael