Whether you want to start a business, expand an existing one, retire early or simply improve your lifestyle, the first essential step is to put your financial house in order. And there is no shortage of tools to help you. One and a million retirement computers, budget applications and useful rules to guide you towards security and long-term success.
Many of them are excellent. But according to a recent interview with Ramit Sethi, financial guru and author of I will teach you to be richyou still shouldn’t touch any of them until you’ve taken an essential step first.
Your financial goals are probably terrible.
In an interview with Charlotte Cowes of The Cut, Sethi explains that many people shy away from financial planning because they feel so sad and sad. There are very few people who like to be instructed not to buy latte or put the $ 1.57 they spent on chewing gum into a spreadsheet. As a result, too many of us ignore money problems or alternate between a commitment to do good and denial like an ostrich.
If that sounds like you, then you don’t need more information or any other tools. What you need, according to Sethi, is a vision of your personal version of financial success. “Most people have never been asked what a rich life looks like for them,” he says, and when asked, they often give the same simplistic and unsatisfactory answers.
Many people will say something like, “I want to do whatever I want,” says Sethi. But when they are pressured about what they want, they cannot answer. Another unlucky group only dreams of getting rid of debt, which is understandable, but deeply uninspiring.
Finally, many people have a dollar in mind. “I want to have a million dollars,” they will tell Sethi, but when he asks him, “OK, where did that number come from?” What do you let them do? ” he receives “silence, because, of course, a million dollars in Brooklyn is different from a million dollars in Kansas City. It’s different if you’re 30 or 60 years old. Most people don’t know what to make of it. “
What should you ask instead?
Objectives like these are neither well examined nor particularly achievable. If this is how you think about personal finances, you are probably acting out of fear of poverty or a sense of obligation. It is much more motivating, says Sethi, to allow your specific dreams to draw you to wise financial decisions. And this can only happen if you have richly imagined financial goals.
That’s why Sethi wants everyone to ask themselves, “How does my rich life look like?”
“I want people to apply a creative vision to their lives. I want people to ask themselves, “If I could have the perfect moon, what would it look like?” These answers are often quite simple, such as “Oh, I’d love to eat once a week” or “I’d love to go out with my family on Sunday mornings and go to the park.” It’s great. Write it down. What park? What would you do in the park? ”He advises.
The more specific and sensory your answers are, the better. “I want to travel” is too generic. Instead, he aims for something like, “I want to go to Bali or Bangkok or New Delhi. I want to fly this place on the plane. This is the dish I want to eat at this restaurant. I want to take these people with me. so that we can have this experience together, ”says Sethi, adding that“ a rich life is lived in detail, and that level of specificity is what allows you to be inspired and then build a plan for it ”.
Of course, imagining your ultimate goal is just the first step in a long journey (the long interview offers much more advice for the rest of the process). But establishing the vision is an essential first step. If you don’t know where you’re trying to go, how will you ever be able to muster the motivation and strategic planning to get there?