Traditional Financial Advice

Let’s say that you’re 30 and you inherit $500,000. What should you do with the money?

 

Traditional financial planning advice might look something like this:

 

  1. Establish an emergency fund
  2. Pay off debt
  3. Get yourself on track for retirement

 

That’s all nice and prudent, but is prudent always the right move?

 

I say no. Sometimes it pays to buck the traditional advice and be a little daring.

 

What Do You WANT?

 

No one lies on their deathbed feeling fulfilled because they made all the “right” decisions. No one is ever truly satisfied by checking off all the boxes someone else laid out for them.

 

True happiness comes from doing the things that matter to YOU. The things that scare you a little bit, excite you a lot, and just feel downright important.

 

Going back to the example above, assuming you suddenly and unexpectedly had a large amount of money, what if you asked yourself the following questions before making any decisions about what to do with it:

 

  • When you’re 80, what will you regret not having done?
  • When are you happiest in your life right now?
  • Is there anything you’ve been wanting to try but felt like it was too big a financial risk?

 

Maybe you’ve been wanting to quit your job so you could go back to school. Or maybe you’d like to take some time off to volunteer in another country while you learn a new language.

 

Those things don’t fit into the traditional financial planning paradigm but they’re the things that make your life worth living

 

And isn’t that the entire point?

 

Finding a Balance

 

Of course, traditional financial planning advice exists for a reason. Building an emergency fund, paying off debt, and investing give you the security and the freedom to enjoy yourself both today and in the future.

 

They just shouldn’t be the only things you consider. You should absolutely make room for the things that excite you too, and you don’t need to receive a big inheritance to do it.

 

Here are some thoughts on how you can balance the practical with the aspirational today, no matter what your financial situation looks like:

 

  1. Make a list of all the practical financial goals you know you should be working towards.
  2. Make a list of all the life goals you’d like to experience.
  3. Pick one from each list and put a dollar amount and timeline on each. How much will each cost and when would you like to achieve it?
  4. Divide the dollar amount for each by the number of months between now and your target completion date.
  5. Automate that monthly savings into separate accounts dedicated to those specific goals.
  6. If you can’t meet the full savings target now, save what you can and make it your mission to get to that full savings target over time.