Over the past five years, I’ve learned an important lesson about money: financial success doesn’t happen by accident; you have to plan for it. Just like living within your means and saving for the future, setting clear financial goals is essential. After all, no one cares about your financial success as much as you do.
The average American spends over 40 hours a week working to earn a living, often feeling like it’s more than that. Taking two weeks of vacation out of the equation, that’s about 2,000 hours a year dedicated to earning money. You’d think we’d spend more time planning how to use that money wisely. However, many of us, myself included, often prefer relaxing or enjoying entertainment over planning our financial future.
There’s nothing wrong with enjoying sports, video games, movies, or other forms of entertainment—they’re important for our well-being. But it’s also crucial to spend time planning our financial decisions in advance.
I must admit, I wasn’t always great at financial planning. Though I wanted to be debt-free, I didn’t have a solid plan to achieve it. For instance, a few years ago, my wife and I bought a house. The inspector warned us that the roof would need replacing within five years, so we knew we had to plan for that expense. Over the next five years, we focused on paying off our credit card debt. When we were about 30% away from being debt-free, the roof started leaking—right on schedule. Since we hadn’t planned for this, we had no way to pay for it other than taking on more debt. We ended up back in debt and had to start over, making me feel like a financial failure and causing me to give up temporarily.
Our approach to financial planning was like using a GPS instead of a map. While I love GPS devices for their convenience, they only show your route in small segments, missing the bigger picture. A map, however, shows you the full journey, helping you plan for detours and new routes more effectively. My wife and I were focused solely on paying off debt without seeing the bigger picture, like needing a new roof. This unexpected expense disrupted our plan, leaving us uncertain about what to do next.
If we had planned better, we’d have realized the need to increase our income to both pay off debt and save for the roof. But our narrow focus on debt repayment never allowed us to see that.
People who plan their finances well make building wealth look easy. Take Pauline, for example. She lives by a beautiful lake in Guatemala, invests in cattle and real estate, runs a coconut farm, and even a personal finance blog. It may seem like she just woke up one day to this idyllic life, but that’s far from the truth. She meticulously planned her financial moves. She chose Guatemala for its lower cost of living and researched unique investments that fit her strategy.
A reader once asked Pauline about her financial journey. She compared it to navigating a river that eventually led her to a peaceful lake, signifying her current financial stability. Despite now enjoying a serene life, it took a lot of hard work and planning to get there. When we see financially successful people, we often only see the end result and not the effort, sacrifices, and planning that got them there.
So, are you planning for your financial success?