Defined by the DOLLAR

I don't do financial blogs as a rule, but what the heck. I went on a walk and was moved by the Spirit to share this model, especially to the young folks who are early in their journey.

First, you must ask yourself, not what is my financial goal, but what is the way I want to define myself. Unfortunately our culture wants to define us by the income line. How much money somebody makes is way too often the focus. Although you do earn it, what income you get over your life is heavily influenced by what others do on your behalf. But what you do with your money is really more about who you are than what you make. Its not the gold line (above) that paints your portrait, but the way the other three lines flow and relate to each other.

It is often said that there are only three things you can do with money
      Spend or consume it on your LIFESTYLE
      SAVE it or the reverse of saving is borrow it
      GIVE it away

What you do in each of these three categories are influenced by your priorities and your priorities reflect who your are. There is no magic formula for you to follow, but you do need to be intentional and strategic about your choices or you will become something different over time than what you intend and the way you want to be viewed by others. This is called late life REGRET.

You should first start with a principle that you decide in your soul is your life's priority. Hedonistic principles would be to have the most pleasurable lifestyle possible, even if it involves debt. A priority of safety would be to save as much as possible to guard against life's uncertainties. A charitable identity would come from a strategy to give away as much as possible and increase the rate of giving across time.

The chart above is a graph of how the latter strategy might look like across one's adult life. The choices made across time include leveling off lifestyle spending in hunks of thirds. That is after the first roughly 15 years, reduce the rate of increase and then after 30 years reduce it again (the number of years are just guidelines, not absolutes). The Saving trajectory is driven by little or no savings in the first 10 years or so, accelerating savings in the middle 20 years, and then leveling off savings in the later years. This produces an increasing rate of savings across your lifetime assuming income follows a normal path of accelerating in years 5 through 35 and then leveling off as one approaches or reaches "retirement".

Now, I understand every person and family will be different for many good reasons. The point of the blog is this - you should visualize across time with a chart like this what you want your life to reflect given an expectation of income. I know none of us control the future and there can be many events that alter what you really do. However, at any and all points in your life you should have a picture of these four lines and how they travel across time in relationship to one another.    

Don't get distracted by financial goals and multi-year plans. They certainly are an illusion of control. In each moment, you have a choice of what to do with income you receive. See every dollar of income as following along one of these three lines, like a paint brush painting your portrait. Imagine that it was a graph of LIFESTYLE, SAVING, and GIVING that was put on display in the final day of your life, rather than a flattering portrait.

Now that's worth pondering .....