How you spend or save
Casts votes for the person you
Want to be someday

With politics and the upcoming Midterm Elections taking over the news cycle like a fungal infection, I was thinking this week about what aspects of voting apply to financial planning.

Thankfully, James Clear did the heavy lifting for me in his book “Atomic Habits.” Mr. Clear (who also has my favorite newsletter) is an exceptional writer, with the ability to convey ideas that are practical as they are profound. I believe anyone can find something useful in the book.

For this article, that useful thing is this: that every action you take casts a vote for a future version of yourself. For example, choosing to wake up early and exercise casts a vote in favor of a future version of yourself that is physically healthy.

As a financial planner, one of the hardest aspects of this job is helping people overcome personal financial biases that may be in conflict with how they envision their future selves.

“Debt is slavery!”

“Life insurance is a scam!”

“Investing during a recession is insane!”

“Gold is the safest investment in the world!”

“Taxes are evil!”

A bias isn’t necessarily wrong in an objective sense, but it might be wrong for a specific person with a specific idea of the kind of life they want to have 1, 3, 5, 10, 20 years from now.

I believe the problem often comes down to a beastie we all have inside of us: the capacity for greed. There is a voice we all have that seems to get louder when money is involved. This voice has a limited vocabulary. It says “more” a lot. It also says “mine” over and over. And once it starts talking, it tends to have a hard to shutting up.

So how can we know when a financial bias – or any idea about money - is coming from a wise place, pointing us towards where we want to go, or when it is coming from our always-hungry, greedy self?

One way is to think about who you want to be and make a choice that casts a vote for that person.

What do you envision for your future? Where do you live? What do you own? What are your relationships like? How do you spend your days? What do you care about?

Then, when confronting a financial decision, ask: “Who am I voting for?”

Some examples:

Spending money on travel casts a vote in favor of having experiences rather than owning objects.

Investing in a Roth IRA vs. a Traditional IRA casts a vote in favor of a future version of yourself that lives in a higher tax environment than you do now.

Funding an emergency savings account casts a vote in favor of someone who can pay out of pocket for an unexpected financial emergency.

Buying a house vs. renting casts a vote for someone who enjoys spending time, energy, and money caring for property and has full creative control over how their home looks and feels.

Investing defensively casts a vote in favor of slower potential growth and, hopefully, less volatility.

Investing aggressively casts a vote for growth in favor of stability.

For many people, the role a financial planner can play in your life is helping to understand what kind of vote you are casting with your financial decisions. If you aren’t sure how to vote for your future self, please reach out. We’d love to help.