“You cannot manage your life if you do not manage your self. You cannot manage your self if you do not manage your choices. Manage your choices, and you will manage your life.” – Dr. Shad Helmstetter
This week I read an article by a high-school teacher who was describing how, almost every time she assigns work to the class, one smart mouthed teen asks “do I have to do it?” Her answer is always the same, “No!”
The first time this happens during a semester, her response is greeted by stunned silence and then, as she goes on to say “you don’t HAVE to do anything, except face the consequences of the choices you've made” there is usually at least one set of teenage eyeballs rolling towards the ceiling. What I loved about her response is that it’s true.
One of the watershed moments of growing up is reaching that point where you have to come to terms with the fact that it doesn’t matter whether or not you want to do something, sometimes things just have to get done. As adults, there are so many situations where we choose to do things that aren’t exciting/easy/enjoyable simply because, as much as we don’t want to be doing what we’re doing, it’s still a better option than dealing with the consequences of not doing it. It can be a tough lesson to learn but, when you grasp it and apply it, life gets a lot easier. This is just as true for finances as it is for schoolwork.
The real problem though is that often when we make poor financial choices we don’t really feel the negative impact of those choices right away and so there’s no real motivation to change. For too many of us, the true impact of our current choices won’t be felt for many years and in some cases, we won’t even be the ones to feel it…
You Don’t Have to Save
Saving is a choice. Every time you purpose money for retirement, or a vacation, or a down payment on a house, or a child’s education you’re making a choice not to spend it on something else. Chances are the something else might be more fun in the short term but most savers will tell you that the drive to avoid the consequences of not saving is far more powerful than the lure of the short-term splurge.
It doesn’t take a rocket scientist to figure out that if you don’t have any savings when you hit your retirement years, you’re not going to be spending your retirement travelling the world and enjoying your leisure time. It’s not illogical to assume that if you consistently spend more than you earn, at some point you’re going to have to clear the debt, it’s not “unfair” that if you dig yourself into a hole, you’re the one who has to dig yourself out.
The reality is there are plenty of things we can choose to do with our money apart from save, the question is, are we willing to deal with the consequences of those choices? And yes, I know that life is short and we could all be dead tomorrow but chances are you’re going to make it to your 70s and even if you’re unfortunate enough not to make it to retirement, do you really want your last gift to the people you care about to be your funeral bill?
Related Article: Principles of saving money
You Don’t Have to Have Life Insurance
Perhaps that last point was a little harsh but the reality of choosing to build a life with no solid financial foundation is that is doesn’t only impact us; it also impacts those we love and especially those who depend on us. I find it interesting that when I was working as a financial advisor, so many people I met who justified not saving for the future because “we could all be dead tomorrow” were the same people who said they didn’t need life insurance because they were going to live forever.
Life insurance is one of those products that people often choose not to deal with because they don’t want to talk about their own death. The challenge is that the impact of choosing not to deal with taking care of your life insurance needs can have devastating financial consequences for those you leave behind. The reality is that if you don’t have enough money right now to cover your last expenses, your debts and to provide for your dependents you need life insurance. It’s not “tempting fate”, it’s just the right thing to do.
Related Article: Do You Need Life Insurance?
You Don’t Have to Have a Will (or Powers of Attorney/Personal Directives)
Drawing up and/or reviewing your will doesn’t rank too highly on most people’s list of exciting things to do (although it probably ranks pretty highly on a lot of people’s “things I should really do but can’t seem to motivate myself to” list). The big problem with choosing not to get our affairs in order is that, just like with life insurance, it’s not us who has to deal with the consequences; it’s the people we leave behind.
Choosing not to have a will means allowing the government to decide (usually in the least timely and most expensive way) how your estate is divided and allowing the courts to decide who should take care of your children. Choosing not having personal care directives and powers of attorney means that if you happen to be seriously ill and unable to communicate your wishes, your family is left to figure out for themselves what you would want and no-one has the ability to take care of your finances for you while you’re incapacitated. Choosing not to take care of these things means making life much harder for those you leave behind; probably not the legacy you’d like to be remembered by.
Related Article: 12 Consequences If You Die Without a Will
April 5-12 is “Money Smart Week” in the US. To me, being money smart, is fundamentally about making a choice to do what needs to be done and understanding the consequences if we don’t. The reality is that our whole society is existing in a cozy bubble of ample credit and low interest rates that has lulled us into a dangerously false sense of security. At some point in the not too distant future, that cozy bubble is going to burst and we’re going to be forced to deal with the consequences of the choices we’ve made. We don’t have to get rid of our debt and get our financial house in order, but by choosing not to do so, we have to realize that we’re choosing to deal with the consequences.