The only thing that really matters

In my relatively young career I’ve had the privilege of working with a great many clients from all walks of life. Schoolteachers and successful entrepreneurs, young married couples and retired engineers, doctors, dentists, lawyers and accountants. How all of these people reached (or are reaching) financial independence isn’t entirely dependent upon the right investment strategy, the right life insurance, the best tax strategy or even good luck (although all of those things help a great deal).  The one thing that ties them all together, the thing that actually results in financial independence, is this:

It doesn’t matter if you are a specialist physician making $300,000 a year or a public sector employee bringing in $65,000.  Your attitude and perspective about that money is the determining factor.  The doctor making $300,000 who just bought a Bugatti and owns a jet boat and two $2,500,000 homes and travels to Venice three times a year is no closer to financial independence than the public employee who earns $65,000 but lives on $40,000. The young attorney who is two years out of school and drives an M5 and has dinner at Elway’s twice a week is far behind his college roommate who became a civil engineer and socks away 20% of his take home into his retirement fund every year.

Making more money is great, let’s be honest. I don’t know anyone who wouldn’t mind a bit more discretionary income. But your attitude towards that additional income and what you actually do with your latest raise have a much more meaningful impact on your long-term wealth than the raise itself. Over your career your perspective about your income and lifestyle will be the single determining factor towards reaching financial independence.  If you can be realistic about what you truly have, if you can resist the pull to keep up with the Joneses, if you can ignore the voice i your head that you “deserve” a certain lifestyle, you will be well on your way. If you book a Swiss ski trip when you should be on a Vail season pass, you’re going to be in trouble.

This isn’t about self-denial and some rigorous, tight-fisted ability to never spend money. This is about recognizing that your future self is as important as your present self and it is your responsibility to ensure that both your present and future selves are provided for. Good financial planning is important, just as a sound investment strategy, good tax planning and proper insurance are important.  But nothing comes close to the power of your own attitude towards your money.

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