The year seems to have flown by quickly, with less than 4 months left for it to end. As I look back at the things I planned to achieve, one stands out – getting fit! This has been on the list for nearly a decade and this year, I finally managed to get somewhere close. This journey of mine towards fitness, has many parallels with people trying to get financially independent and this has helped me understand and empathize with customers better, by looking at the need for financial planning, being in their shoes.
Phase 1 – It’s a breeze, I can do it myself. I don’t need a trainer
When I decided I wanted to get fit, I thought it would be a breeze, and now that I had decided, all I had to do was do a bit of exercise and eat smart. I could not understand why people engaged with a nutritionist and trainer. What a waste of money and time, to do something as basic as getting in shape, I thought.
Armed with the newfound motivation to get fit, I did a bit of walking, changed my eating habits very slightly and looked at the weighing machine with hope every few days. It just refused to move. This whole phase lasted a few years. There was no consistency in my effort, and though the intent to do it right was very much present, it always kept getting pushed to “tomorrow”, which obviously never came.
I see many parallels to this in the journey of people trying to achieve financial independence. Many of them start out saying this is common sense, just save every month and very soon you will have a good corpus. The amount they save has no correlation to the goal they are trying to achieve. The investments are dipped into at the slightest of provocations. The newly launched phone, a lavish birthday planned, are all legitimate reasons to put the savings on hold.
I often tell people – don’t kid yourself by starting an SIP for a miniscule amount, its only a tick mark activity, and unlikely to ever take you anywhere on your path to financial freedom.
Phase 2 – I need a bit of motivation and help, nothing personalised, let me join a group
It took me a few years to wake up to the fact that my walking and working out on an irregular basis was not going to deliver at all and I did need some help. I decided to be smart and achieve the target by joining a running group. It was of course better than phase 1, and since I had paid up, I did manage to train 3 times a week and made some fabulous friends. It was also a good point of discussion in many social gatherings on how I trained for marathons. Yes, I did manage to do a few marathons. Neither did my timing improve nor did I lose any weight or inches. I can now honestly say that I was nowhere near my definition of fitness.
Again, in their financial independence journey, I see that most DIY people at some stage, sufficiently alarmed by the years passing by and the savings pot not growing in tandem, move to seeking advice from some form of website or robo-advisor or even “tips from knowledgeable friends” where they get advice instantly on where to invest and how much. There is a sense of achievement on being more systematic with investments. There again, they may end up saving more than they did previously but are they really taking their entire unique situation into consideration and moving comfortably towards their financial independence, is something they need to ponder on.
Phase 3 – I need proper personalised guidance to help me get on track and stay there, let me engage with a professional
I finally realised that if I seriously wanted to get fit, I would need to engage with a professional who knew his job and so, I enrolled with a personal trainer. I now realised the difference between what I was doing in the name of exercise and what it really meant to exercise. I was consistent and trained 3 days a week without fail. I started to lose inches and feel more energetic. The weight wouldn’t budge. I realised that I would not only need to exercise but also ensure that my nutrition was right if I were to get anywhere close to being future-fit from a health point of view. I then visited a naturopath to get rid of some of my niggling health issues. My stated objective was to get rid of allergies, my secret hope was to lose weight. Major lifestyle changes were suggested by her, give up on sugar, no processed food and a lot of other changes. I followed advice strictly. The initial few weeks were very difficult. Despite giving up my favourite food, there was no improvement. It took few months for the changes to be seen. And a few more for people to comment on it.
A journey towards financial security and independence is similar, your situation, goals and aspirations are unique and hence advice that is personalized keeping those in mind will hold you in good stead. Similar to the above story, just concentrating on one thing, investments, is not going to be sufficient to get you to your destination. Apart from investments, you would also need to look at your spending and income. Like with my weight, you may secretly aspire for a certain return. You may peg it to the best return you have got over a life-time and evaluate your investments against your benchmark. Your planner will not even be aware of what you are anchoring your expectation to.
Financial planning requires you to see much beyond returns and wait patiently without losing faith during turbulent times. At least in the above case of my health, results started showing in a few months post engaging the right professionals. In case of your finances, it may take a few years for you to see meaningful results. In the interim there is only pain, since you will need to cut down on unnecessary expenses, ensure you invest smartly and stick to it even when you see you are getting unsatisfactory, maybe even negative returns.
Again, unlike the fitness story, there is no before- and after- picture to flaunt, all you will have is peace of mind that you are well prepared for your future. No one is going to compliment you on your financial health, unlike your weight. What you will see though, is that you are inching closer to your life’s goals, sometimes because of your returns and sometimes despite your returns. Either ways, having someone who has your back through the journey and motivates you to stay the course and steer you clear of some impulsive emotional actions can be invaluable!
Finwise is a personal finance solutions firm that helps both NRI and resident individuals and families plan for their financial goals, follow their passions and achieve financial independence.
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