You are owed what?

It is interesting how our attitudes dictate actions.  My job is to help people be prudent, but what does “prudence” mean?  It means being reasonable with your actions and desires so that we put probability of success on our side.  Now what is probability of success?  Well let’s list some highlights:

1.  spend less than we make

2.  have a budget

3.  work hard

4.  enjoy what we have

5.  to know we are on time for financial success at retirement

6.  have six months in emergency funds

7.  at retirement be able to spend less than 3% of our wealth

8.  have no debt

9.  have five years of what we need out of our portfolio for income in conservative assets

So what is the opposite of having the probability of success in our financial plan?  I believe the opposite is probability of failure.  What leads a person to follow this path when we are in the richest country in the world with so much potential and so much opportunity?  Maybe the following:

1.  Lack of vision

2.  lack of motivation

3.  lack of education about what it takes

4.  expectation that someone else will do it for us

Of course it could be the disease that I think is rampant in the United States, being a Moneyholic!  It is so easy to be a Moneyholic.  The media tells us we can buy anything we want.  They tell us that everything we see will make us happier if we own it.  Whether we can afford it or not?  The financial marketing machine tells us that their investments will allow us to have all we wish.  Is it even healthy for us to have all we wish?  I doubt it.

If we are not happy with whom we are, and all that will make us happy are things or spending money, the chances of financial success are slim.

I deserve that!

Every once in awhile someone tells me that they deserve something.  Whether they can afford it or not for some reason in their mind they are owed it.  What in God’s green earth are we owed?  In America we are owed the right to the pursuit of happiness.  Does the pursuit of happiness mean that we are owed something by someone whether we can afford it or not?  No, the pursuit of happiness is the freedom to work hard, reach high and to dream.  But it does not mean that we will not fail.  It is not guaranteed. But the pursuit of happiness or success is sometimes a long road that many are not willing to work toward.

You need to remember that we are not owed anything, except the right to strive to be the best we can be.  Then at the end of the day when we have done our best we need to learn to be happy with ourselves and what we have.  Otherwise, we are doomed to be moneyholic’s and believe that the only way we can be happy is to have things we cannot afford nor do we probably need.

So what magnifies the probability of failure, financially?

1.  no emergency fund

2.  spending more than we make

3.  not saving 10% of our income

4.  buying depreciating assets with borrowed money

5.  having no plan

6.  not knowing what we need to do to be successful

7.  having a portfolio that is not diversified, well allocated nor correlation well

8.  making our financial decisions emotionally rather than with a plan

9.  to covet things we do not have

So what have you done to put probability of financial success in your future?  Many say they don’t care.  That is easy to think when you’re young, but not as you get older and your financial dignity relies on you affording just the simple things in life.  Money will not make you happy but it gives you choices.  It allows you dignity and significance in your older ages.  You will care if you can write a check for your fair share when you are older, but that means you need to plan today.

No one owes you success.   No one owes you wealth.

But you have the freedom and the right to pursue both!!

Image courtesy of www.morguefile.com http://mrg.bz/M05S8S