One thing we can always know for certain is the past; but with far less certainty, the future, and even ‘later today’… eludes us. Despite knowing this, we often fall into the trap of thinking that we should have done certain things better, because we can see (looking back…) what a difference it would have made in our lives today.
Some of the lingo we repeatedly hear says: “Do something today that your future self will thank you for.”
Market updates are full of articles telling us that if we’d invested $1000 in Amazon, Tesla or Google etc, it would be worth tens of thousands now. But a good financial adviser or wealth manager will tell you that this information only tells us one thing: we can learn from the past, but we can’t predict the future.
When it comes to personal financial planning, we need to be aware of what’s going on around us, but we can’t put that first. What’s going on in the world (past and present) should colour our decisions, but not form the heart of our personal financial plan; your personal financial plan needs to be about YOU!
Even when we look at our own personal financial situations, we can fall into the trap of looking back and wishing we’d played a few of our cards differently. Sometimes, this pertains to habits we’ve formed from our very first paycheck.
We can’t change what we’ve done with the last 12, 36 or even 120 paychecks, but we can decide what we will do with the next one.
1. Get into the habit of saving
When we receive our paycheck (or a few bulk client payments for those who are self-employed) it can feel so well-deserved and the urge to spend is overwhelming. We need a plan to avoid spending it all, thinking to ourselves all the time that we’ll save next month.
Warren Buffet says: “Do not save what is left after spending, but spend what is left after saving.”
Saving is about paying your future self a bonus. It’s a habit that will only benefit you – if you haven’t been able to form this habit from your first paycheck – try and start it this month.
2. Personal finance is personal
It’s really hard to see the things that our family and friends are buying and not feel tempted to make similar purchases, simply because they have done it first. If their money decisions make sense with your personal plan (like buying a practical car or investing in a course to upskill) – then learn from their homework and outcomes. But, if it’s outside of your dreams, your goals AND your income… don’t do it.
Many people look like they are doing really well, but they’re actually drowning in debt. Try not to be one of those people. If you are, remember that your finances are personal – they’re yours; you’re in control. We can work together to manage your debt, we can also work together to help you make personal financial decisions that make sense for you. Use your next paycheck to make decisions that are unique to your personal financial situation.
3. Avoid bad debt
Spinning off that last thought; avoid bad debt!
Not all debt is bad, but it makes no sense to pay the high interest rates attached to credit cards when a bit of planning and patience will allow you to buy the things you really need. Especially when times are tough, it’s easy to take out extra credit rather than reign in our expenses. This is the advantage that you have in a financial adviser – together we can help you make objective, positive choices for your next paycheck.
In a recent article on Allan Gray’s website, Phiko Peter wrote the following:
“You are at your most powerful today to take care of the “future you”.”
You can’t change what you did with your first paycheck – but you can change what you will do with your next one.
