Welcome back to the blog! Last week, we wrapped up the Investment Series, which you can read the overview of here in our conclusion post which will walk you through the initial steps of creating an investment game plan.
For the next few weeks, we are going to shift gears and stick to more conceptual topics before we kick off our next series, which will be all about Cryptocurrencies and the Blockchains they run on.
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This week, we’re going to talk about putting a filter on life and the things we spend our money and time on.
Over the weekend, I was thankful for the opportunity to be the Best Man for one of my great college friends, Alex. As many of you surely know, being the Best Man at a wedding comes with the task of writing a speech to share at the reception.
While I am not a huge fan of public speaking, I was truly honored and excited to give a speech.
To make it an even more special occasion, it was nearly 10 years to the day when I first met Alex, and our friendship began. We met around Halloween time our freshman year in the dorms, and have been great friends ever since.
The absolute hardest part of writing the speech was filtering out the best few stories to highlight who Alex is as a friend, not relying too heavily on inside jokes, and trying to keep it short and to the point.
When you’ve been friends for 10 years (especially through college…), there are just simply too many adventures, fun times, life lessons, and stories to share in a 5-minute speech.
In the years of working with clients as their financial planner, I find the same to be true with the financial resources we have at our disposal. There are so many competing options to use our hard-earned money on, and falling victim to “analysis paralysis” is all too common.
The Process of Filtering:
What I enjoyed most about going through the process of writing the speech for Alex’s wedding was replaying all the memories of our friendship, many of which would put a smile on my face, and a few that left me laughing to myself at my computer desk.
I am sure many of us could look back on our financial lives and find the same to be true. For me, a few financial memories that I look back fondly on are the trip I took to Ireland (with Alex and another good friend of mine), taking my brother to the Gateway Dirt Nationals for a racing event in the old St. Louis Rams stadium, and a trip I took to San Diego with my mom and sister.
No different than my memories with Alex I chose for the speech, my most enjoyable financial memories were all experiences, not things.
At this point in the blog, I’d like you to pull out your phone, set a timer for 5 minutes, and just think about what you would choose for your top 3 financial memories.
What were those few things you feel your money was best spent on? What wouldn’t you think twice about spending your money on again?
This is the part where you actually stop reading for 5 minutes!
All done? Great!
Feel free to shoot over a message using the form below to share yours!
This is something I really hope to do more as I go through my budget and credit card statements each month. Taking time to reflect on where my money felt best spent.
Many times, the media we consume on a daily basis isn’t going to ask you to come back a month from now and ask you to think if it was worth it. They will probably be moved on to the next thing they want you to buy.
If you’ve read along on this blog for any amount of time, you’ll know I always start with “why”. If you are new here, feel free to go back and read where this blog all began.
Understanding the “why” when it comes to our money has never been more important.
Back in 2017, Forbes estimated the average American to be exposed to around 4,000 to 10,000 ads in a day.
That is A LOT! They are everywhere though, on our screens we carry in our pocket, on the side of the road, on buildings we drive by, and who could forget all those lovely emails we get?
If we don’t know the reasons why we are doing the things we do or the reason why we are buying the things we are buying, how will we ever know if it was a good decision?
The same was true when writing my speech for Alex. Why was I up there to give a speech?
In addition to entertaining those listening to the speech, the primary two points I wanted to convey were…
- To let Alex know how appreciative I am to be a friend of his, and to show gratitude for all he has helped me with in my life.
- To share with those joining in the celebration WHY Alex is going to be an amazing husband to his wife, Kayla.
Those two points helped me narrow down where to start with the story I wanted to tell in my speech. To narrow it down a little further, I wanted to focus on the singular trait I felt embodied those two points the most… his loyalty.
From there, it was pretty easy to pick out a few stories to include in my speech.
The same concept is true of our money. If we can start with the main points we want our financial decisions to follow, the rest will come much easier.
The best part is, if you check in often, you don’t have to conduct the 5-minute exercise we just completed before every single purchase you make.
You can instead use a much simpler method of auditing the effectiveness of your spending in relation to what your guiding principles are when it comes to your finances.
For my review, I simply go through my credit card statements and complete the following exercise. It usually only takes me 5-10 minutes per month.
- Cross out any essential living expenses (Rent, groceries, etc.). I cross these out because they are things I need. If I am overspending in this category, I know I just need to be more specific with when I am making these purchases and better at tracking them throughout the month.
- Put a checkmark next to the things I feel (when looking back) were an enjoyable use of my money that month.
- Put an X next to anything I didn’t enjoy when seeing it on my statement.
From there, it’s a simple math equation. Did I have more checkmarks than X’s on my statement that month? What could I do to increase the final number?
Some things are unavoidable and will fall into the X category, but the key is to simply be aware of it.
When you’ve found the items in your spending that don’t align with what your financial filter is, you now have a target to focus on next month, and you’ll know it exactly when you see it.
For me, it’s almost always the smaller $5-$10 purchases. The things that “are just a few bucks”, but these are almost always the things we won’t care about or remember a month from now.
Learning From the Failures:
The key is to embrace these “failures” in our spending, and not feel guilty about them. Instead, find the lesson.
In the case of the speech I wrote for Alex, it was about embracing the unavoidable conflict two friends will have when you live together for nearly 4 years as college students. Rather than shying away from them or talking about them in a negative light, instead, find the lessons in those moments that have inevitably made your friendship even stronger.
I’m a firm believer that even when you screw up, as long as you learn from it, it’s a good thing. The same is true in the relationships we value, and the financial decisions we make. It’s all about how we work to better the decisions and choices we make next time.
When it comes to budgeting and honing in on our spending, it’s all about finding what your filter is in this busy and spending-focused world we live in.
Forget about what’s outside the filter, and I bet within a few months you won’t even miss the things you put an X next to.
Don’t worry about what other people think, what other people spend their money on, or what you might be seeing around you.
No different than writing my speech, if I were trying to please everyone in the room that night, it would have been a really long speech, probably pretty boring, and I would have missed the point of the entire speech. It was for Alex, not for me!
Whether it’s being a good friend or a good budgeter, you’ll know what feels like the right thing to do when you see it, and you’re the only one who will know what that thing is.
Until next time, keep playing your own game.