Balance

Balance

Throughout the world’s cultures and religions, the concept of balance is one of the most prominent. From the metaphysical yin and yang in eastern beliefs to the more corporeal day and night in Judeo-Christian theology, balance is prominent for a good reason. The brilliant scholars and philosophers of humanity’s past understood that there exists a balance in all things.
We all know intrinsically that we must balance work with home life and wants with needs. From our minds to our bodies, balance is a daily activity. However, there is one aspect of life in which, as a wealth management advisor, I often see people struggle to understand how to find balance, and that is in gratification.
Struggle to find Balance
Many times, I have heard prospective clients argue that they would prefer to spend their money on their lifestyle now, rather than save for their lifestyle later. And fair enough. That is a sensible position. I have also seen the opposite, where the fear of financial difficulties in the future compels one to save every penny, and deal with the proverbial “holes in their shirt” for a few more years.
These two examples are at the far ends of the balance beam of gratification. On the one hand, immediate gratification, and on the other deferred gratification. What I would like to acknowledge is that there is a way to have what you need now, while still preparing for the future; but, as is always the case, it requires balance.
When being asked if they would prioritize paying off their home, most people will answer yes. While that is a reasonable answer, it begs another question. As opposed to what? Annually, if your mortgage costs you 3% and your investments earn you 10%, then it only takes some simple math to realize where you should put extra money. This is not to say that you should never pay off your house, it is simply to say that you must balance paying exorbitant payments on low interest debt with making substantial contributions to high rate of return investments.
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In another scenario, one might be challenged with affording their current lifestyle versus ensuring that the same quality of life will exist after they retire. Once again, this requires balance. You have all heard the rule of thumb on this; save 10% first and live on the rest. By striking this balance you can ensure that you do not jeopardize your future self for your current self.

Another point of balance is in how you treat your money sources, both savings and income. You all understand that you cannot spend more than you make, and you take careful effort each month to ensure that you do not out-spend your income. However, in the interest of balance, you should be equally careful of how you are “spending” the money that you have saved. For example, if you have a lot of money sitting in cash or have bought into a bad investment, you are effectively diminishing what your future self will rely on for income.

The bottom line here is that planning for retirement requires balance. It is not that you should save everything, but to save enough. It is not that you should never pay off debt, but to ensure you are saving for the future as well. You can balance your lifestyle with your savings, your debt with your investments, and thereby balance your present with your future.

At Strategic Planning Group we have learned that by balancing the various incomes, savings, debts, and spending, people can have enough for now and later. This can eventually amount to you being able to live your Perfect Calendar in retirement.

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