STUDY THE PAST TO AVOID FUTURE MISTAKES
As originally appeared in The Jerusalem Post on July 27, 2018.
You know you’re getting old when you get that one candle on the cake. It’s like, ‘See if you can blow this out.’ Jerry Seinfeld
Thankfully the Jewish calendar is full of days that are great for personal reflection. Obviously, Yom Kippur and Rosh Hashana come to mind, and not worry anyone but the Days of Awe are fast approaching! Funny enough my birthday is this weekend. I am not looking for any presents or phone calls from family members but I do think a birthday is a great time to reflect. The older you get the more you tend to look back on the past. Unfortunately, when looking back, too often people focus on “what could have been.” Instead of learning from the past to better their future, they start getting depressed. What really should be done is to look back and focus on what went wrong and then use that to make certain changes going forward.
Not surprisingly when it comes to money, people often obsess about missed opportunities, and how if they had just invested in such and such they would be millionaires by now. If all you do is look back with regret, it’s going to be hard to solve problems moving forward. Personally, I can say that had I followed my instincts and bought 2 specific stocks, I would be sitting on some sandy beach drinking something with an umbrella stuck inside. Now I can sit and cry about it and accomplish nothing or learn from the mistakes, understand what I did wrong, and if the same type of opportunity comes along… I’ll pounce on it. That’s what we all need to do. Learn from our past mistakes in order to improve as individuals.
It can be life changing
Change is far from being a simple process. But just because you have lived a certain way financially for decades doesn’t mean that you can’t change. Start making smart financial decisions. If you live in financial chaos and felt that you were being pulled in many directions and sinking into debt, take control of your situation, start to make financial order and get on a budget. It’s okay to say no sometimes. Yes, you may seem like the bad guy for telling your kids that you can’t fly to France to go skiing or that an iPad s out of the question, but you need to have the confidence that by saying no, you are immediately improving your family’s financial situation.
I am writing this from Seattle. On the plane ride, I was watching some movie about a “shopaholic”. She was unable to practice self-control and rationalized every purchase. She was unable to distinguish between financial needs and wants. As I have written before I do a lot of volunteer work for an organization that helps get people out of debt. One of the exercises that we do is have each individual keep track all of their expenses. Not only do they need to write down each and everything they spend money on, but they also need to rank the expenses. We have 4 levels of expenses; Vital, important, not so important, and luxury. This turns out to be quite eye-opening. When people have to be accountable to themselves and their spouse about how and where they are spending money, changes start to occur. When one sees in black and white how much money is being spent on things that are not so necessary, suddenly the ability to cut down on expenses becomes attainable.
Paula Pant of the Balance.com writes about how Ron Lieber, a money writer for the New York Times, once interviewed Elmo about the difference between needs and wants. Lieber asked: “If Cookie Monster is really hungry for a cookie, does that mean he needs it or he wants it?” Elmo didn’t miss a beat. “He wants it,” Elmo replied, “but if you ask Cookie Monster, he (thinks he) needs it.”
By understanding what went wrong in the past you can create a much better financial situation in the future. You need to define your goals. Where do you want to be in 5, 10 or even 20 years? Take a few minutes and start jotting down some short, medium and long-term goals. Then speak with a financial professional to figure out how you can achieve those goals.
Don’t fret over getting a year older. Learn from your past mistakes in order to create a better financial future.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
