If I asked you what your dream life would look like, how would you respond? In concrete terms, what kind of life do you expect to have in 5 or 10 years, or even at retirement? Does the thought of owning a gorgeous beach house with breathtaking ocean views to escape the cold winter months invade your mind? If so, use that fantasy to drive the motivation you need to put a plan in place. This New Year, it is time to make daydreaming a reality.
Whether your goals are short-term or long-term, they will more likely than not cost you money. Do your dreams seem unobtainable? Be patient, they simply may require more time to get to.
We have been trained as a society to “live in the now” and achieve instant gratification. We want bigger and better, and above all, we want it now. But, if all resources are expended in the present what will you have left to realize your future plans?
And so, there is no better time than the present to begin proactively thinking about your future plans. The following reasons should prove as an incentive to start now, rather than later!
The Power of Time: A recent quote I fell upon by Stacey Charter was “Life is all about timing… the unreachable becomes reachable, the unavailable become available, the unattainable, attainable.” The more time you have in front of you, the more likely you will realize your plans. Time will allow you to accumulate savings, strategically map out your finances and grow as a professional. Overtime, opportunities for job advancements or simply increased knowledge will present themselves, all of which will increase your ability to make the most of your resources and succeed at reaching your future dreams.
Compounding is on your Side: Time will not only enable you to accumulate more savings but it will also enable you to unleash the power of compounding. Compounding is the ability for an asset to generate earnings, which are then reinvested in order to generate their own earnings. Did you know that if you put away $200 every month for the next 10 years at an average interest rate of 4.5% compounded monthly you would have accumulated $30,353. Out of the total amount $6,353 is interest, initially only a small amount of interest is accumulated, but later on the amount increases on an exponential basis as interest not only increases due to the larger amount invested but also due to earning interest on the re-invested interest from prior years.
Delayed Gratification is correlated to Life Successes: A research study called the Stanford Marshmallow Experiment was conducted to analyze delayed gratification. In this study, kids were given a choice to either eat a marshmallow right away or wait 15 minutes and get rewarded with a second marshmallow later. Follow up studies have shown that the kids that were able to delay gratification tended to have better life outcomes as shown by SAT scores, body mass indexes, educational attainments and other life measures. Most of these results were attributed to a part of the brain called the pre-frontal cortex which serves as a mental sketch pad and plays a large role in decision making. The participants of the study that were able to delay gratification had a better ability to envision the future rewards in their mind and thus could easier obtain the future state. Do the same with your finances. Set short-term goals, rather than reacting on impulse, and slowly build your way to an ideal state. In time, you will be largely rewarded for sticking to your plan!
It is never too late to start integrating good habits into your life. Starting to save for future plans does not have to be a burden. Take your finances into your hands and plan for what is important to you. Contact an Astrolabe consultant to help get your plans underway.
Wishing everyone a prosperous and financially healthy 2014!