Choose Your Lifestyle

Choose your Lifestyle | Josh McAlister

This blog is the last of the four-part series of ‘giving every dollar a job.’ The last use of money, and the one we have the most control over, is your lifestyle. My goal is to accomplish two objectives:

• Remind you that your lifestyle is a choice
• Connect your lifestyle choices to long term outcomes

As a reminder, below are the four categories where every dollar can go:

1. Taxes
2. Charity
3. Savings
4. Lifestyle – Our Discussion for today

Wait – My Lifestyle is a Choice?

Comparison is the enemy of any sound financial plan. We compare everything we have to our environment – our home to our friends’ home, our car(s) to our friends car(s), where our kids receive their education to other families, even what knowledge we have relative to others. It is an endless loop that goes around and around and the victim of this cycle is our finances.

When we compare our lives to others, we never actually give ourselves a chance to accomplish our own goals. The constant comparison fuels an insatiable desire to be something, do something, or impress someone that all to often does not care one iota about you – they are too busy comparing their status to someone else.

We are a product of our daily behaviors. We set the rhythm of our life every day. Financial Independence, defined as “placing no reliance on a job or anyone else to maintain your chosen lifestyle” sounds great. I would make the argument that every reader desires financial independence under this definition. Ultimate flexibility, discretion, and freedom. Count me in. Best part is I get to define my own financial independence.

Problem: Our behaviors of comparison are a plague that do not allow us to create a goal to achieve, let alone setup a system to execute the goal, monitor progress, and evaluate results. We simply do not plan our own lifestyle to give every dollar the job we want it to achieve!

Your lifestyle is your choice – you determine the impact your dollars have, plain as day. One of our core values at AWM is ownership, and with that comes a level of responsibility that is binary. Either you achieve the outcomes you desire – or you do not, and the determinant of this result is the sum of your daily decisions. This part of sound financial advice does not involve complex investments or tax strategies, it involves looking internally and determining what is your enough.

Long-Term Ramifications

Without determining your enough, the rest of this article is useless. My job as a wealth coach is to first and foremost help families determine their enough, ensure they save for their future goals, and then expose those savings to the appropriate investments to achieve their outcomes. Our victory is our clients thinking long-term about their finances.

This long-term focus starts with a simple statement – the more they spend, the more our clients will need to earn and thus save. I love working through client’s annual income statements with them (a client’s income statement is determining their four uses of money!) We do this exercise on an annual basis, and it sets the foundation for tracking and evaluating results – either your dollars went where you wanted them to go, or they did not. By doing this on an annual basis, the best information you can determine is how much do you need to save to achieve your own financial independence.

The value of a trusted advisor is someone who can work with you to determine your lifestyle. Each human is different and has different dreams/priorities/outcomes to accomplish, and therefore your situation necessitates customized financial planning.

Conclusion:

The takeaway here is best summed up in three (3) challenges to achieve the lifestyle you desire:

1. Before determining your lifestyle number – determine what your tax, giving, and saving number for the year is.
2. Understand what your current lifestyle is. Know what you spend on a monthly and annual basis.
3. Avoid comparison to other people’s finances at all costs – your lifestyle is yours alone.

I challenge you to review these three principles on an annual basis – if you accomplish these principles, you will win at money.