Wednesday, October 29, 2014

Balancing Priorities ... Houses and Cars and 401(K)s ... The 'Seen' and the 'Unseen'

It's all too often the case that we mistakenly place a high value on some relatively insignificant 'here and now' things, while not taking the time or make the effort to deal with other and much more important 'later on' things.

And that mistaken set of priorities is the result of our very human tendency to value the 'precious present' at the expense of what we mistakenly think of as the 'far off future.' In addition, 'how things look' to peers and family may make us concerned unduly with appearances and keeping up with the Joneses, even though the Joneses probably aren't keeping up with the needs of their future selves either. In other words, our 'here and now' younger years of adulthood are often dangerous to our financial well being in the 'later on' years.

Yes, we tend to notice our neighbor's new car and perhaps envy the house in which our co-worker resides. Then we tell ourselves that we deserve to have those things too. Call it the curse of the 'seen,'  because frequently what's visible and 'owned' by others is what we want for ourselves. When we see our neighbor or co-worker with an expensive house or car, for example, we are prone to borrow the money to follow the example and that's when we make a life altering mistake. Making matters even worse, these mistakes are often invisible to all concerned, including us.

But what about 'seeing' the equally if not more important 'unseen' future stuff that we need, and which isn't visible to others --- such 'unseen' stuff as the burdensome debt associated with purchasing these 'visible' but attractive houses, cars and other big ticket items? And even more important, what about the 'unseen' 401(k) balances because we decided to buy those expensive houses and cars in lieu of saving for the future?

We need balance in our financial lives, and we need to learn to place an equal emphasis on the visible and the invisible, as well as an appropriate balance on the here and now in relation to our future needs.

Living Your True Wealth tells it like it is for too many of us, unfortunately:

"How much money do you make?

If this question immediately makes you uncomfortable, you’re not alone. . . . We’re not comfortable talking about money. We’ve been taught that it’s rude. Even more important, we may be afraid of what the numbers say about us.

This issue came to mind about the same time my teenage son started to notice cars. He’s become familiar with many of the high-end makes and models. . . . It also didn’t surprise me when I started to hear him say things like, “That guy must have a lot of money if he’s driving that car.”

We may be very uncomfortable sharing with others our wealth in numbers. We’ve gotten really good, however, at building a material world around us that implies something about our wealth, even if the reality is something else entirely. We’ve gotten so good at it that we often treat these material things as a sign of our success. In reality, they aren’t a measure, or substitute, for any sort of real success. . . .

What would happen . . . if we had to walk around with our true wealth flashing as a number above our heads? It would be the end of consumerism . . . . Why would you need to buy something to represent wealth if everyone knew exactly what you were worth already? . . .

I don’t blame anyone for valuing their privacy or seeing their income as something to keep private. But that silence comes at a cost, and I believe it’s one worth exploring. . . .

Remember my son’s comment about the drivers of expensive cars? You probably know at least a couple of people who put on a fantastic display of wealth even though they don’t have much. They are so concerned about appearing successful that they make buying decisions that get in the way of long-term financial success.

It may never happen, but our relationship with money would change considerably if our financial decisions were transparent to the world. For instance, what would change if the car we drive or the home in which we live could no longer hide that we’ve saved nothing for retirement? Would it be easier to focus on the financial choices that help us instead of hurt us?...

Do you find yourself still doing things that just look good, or are you doing things that actually are good for you? Do you find it easier to be your authentic self? And, perhaps most important of all, do you now understand the difference between buying the trappings of success and actual success?"
Summing Up

What isn't seen or visible to others, our future well being, is often what should be of utmost concern to us.

Our financial well being later in life very much depends on acting in a financially responsible manner throughout adulthood.

That responsibility requires that we embrace the habit of saving and investing while young in order that we can still enjoy life down the road.

Focusing only on the sizes of our cars and houses, while ignoring debt levels and credit card balances during our younger years, and not setting money aside in a 401(k), can never match the personal satisfaction of knowing that we are doing what's necessary and proper for our future financial comfort and well being. 

That's my take.

Thanks. Bob.

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