Never confuse activity for effectiveness. Many people wrongly believe that because they are busy, they are also moving forward and accomplishing goals. Without activity, there is no effectiveness but there can be plenty of activity without effectiveness. It’s important to differentiate between the two.
Many people tend to think that the Top 1% of income earners in America is a fairly ubiquitous group that tends to stay consistent through time. In fact, nothing is further from the truth. The odds of getting into the top 1% of income earners are higher than most think, while the odds of staying there are far, far lower than most think. A 2016 study by Tom Hirschl of Cornell University and Mark Rank of Washington University in St. Louis highlights some of these important facts. Note that this is just income – the top 1% based on wealth tends to be much stickier.
Years ago, David Bach hit it big with his concept of the “Latte Factor.” According to his website, the Latte Factor concept is based on focusing on small expenses in order to save money for retirement and other goals. In theory, by eliminating those $5 and $10 recurring expenses, you can have the money available to save for your long-term goals. He was able to turn this concept into a nice little empire, writing books and even showing up on Oprah a few times. The best example he used was spending $5 on a daily latte at the coffee shop in the morning – hence the name.
Should you believe in God? More importantly, what the heck does that have to do with a family finance blog? As it turns out, a lot. Blaise Pascal was a French philosopher, mathematician, physicist, and inventor – basically the classic Renaissance Man. He came up with what I believe to be one of the better driving philosophies for life. Pascal developed what is now known as Pascal’s Wager, the idea that you should believe in God if only because the upside is so much greater than the downside.
Most of us dream of working a fulfilling career until we have enough money so that we can choose our own path: we can stay if we wish, move on to a new and more fulfilling career, or head out the door with two middle fingers straight in the air never to work again. But what do you do if something happens before then, and you are forced out of your career not by your own choosing, but because your employer fires you and you are unable to find another job? Hopefully this is an unlikely scenario, but do something stupid which ruins your reputation, or heaven forbid, gets you caught in the social media mob storm, and you may be doomed to an early exit.
Almost no one changes the default settings on their tablet or their computer. The majority of people use the default ringtone on their cellphones. Many people don’t sign up for their 401k because they never get around to it. Such is the power of default settings. Much like anything else, our personalities have defaults; defaults that we are both born with and learn over time. However, these defaults can also be changed to something better, if we choose to do so. If not, defaults can be dangerous and lead to unproductive behavior.
Follow your passion and the money will follow. So goes the advice anyway. It’s also not very likely. Not only not likely, but given how happiness and life satisfaction work, there’s a good chance that you’re following the wrong path. Following your passion is great advice; just not when determining a career path. The University of Montreal did a study on their students’ “passion” years ago, as related through the website 80000hours.org. 90% of college students were passionate about sports, arts and music. Unfortunately, only 3% of jobs are found in sports, art, and music. Or, as 80000hours.org put it in a nice succinct chart:
Moderation leads to a happy and healthy life, while extremes cause an unsustainable pattern of highs and lows. Can moderation also lead to a successful life in all important aspects? Being Even Steven (apologies to the women reading this – there seems to be no female version) does not mean a life of mediocrity. Rather, being an Even Steven means balancing out all parts and not allowing one portion to receive outsized attention over the rest. It ensures that we develop and improve across the board and in a well-rounded manner.
Self-discipline, focus, and grit are all key components of making steady progress towards your ideal life. Behind all of these is the concept of accountability. Accountability means being responsible for your own actions and answering the consequences of those actions. It means not passing the buck and not shirking your responsibility. It’s a trait we all want to see in our leaders, and our leaders all want to see in us. With accountability, all things are possible. Without it, little of what’s worth doing is.
Goal setting is so ingrained in our society that it would be heresy to suggest there is any other way to get ahead. Like anything else, goals can be positive if used correctly, or they can be debilitating if used incorrectly. Most of us use goals incorrectly. We set unrealistic goals or we set them too low, focus on too few or too many at once, and underestimate or overestimate the time and effort needed.