Zoom Out; Way Out:
Before looking at specific questions, it's important to zoom out to see the important framework for making those decisions.
A close friend of mine sent a snippet from Robert Glazer about Alex Smith's (the NFL quarterback) recovery from a life and limb threatening injury and subsequent bacterial infection to rehabilitate to a point of starting again at quarterback. I knew most of the story — 17 surgeries, 2 years of rehabilitation, and 1 titanium brace to make the roster as a 3rd stringer (what ESPN told me). He eventually earned his starting role back and led Washington to its first playoff appearance in five years before announcing his retirement. The crowd cheered for him upon taking the field. They knew the journey he had taken and how scary it was at times.
What I didn't know, was the deep, foundational, "why". Why put all that work in to retire after that season? I figured it was about "proving" something, maybe to himself, but it was bigger than that. His wife, Liz, and their kids carried that burden with him. He couldn't have done it alone, his community, family, and trainers made it possible.
Smith later said he was mostly driven for showing his 3 kids a valuable life lesson: That no nightmare is too great to overcome. And that if he could rehab to the point of starting again in the NFL, he would also be able to take part in the kids' activities throughout their lives. Using that figurative NFL measuring stick to assess his ability to chicken fight in the pool with his kids is a different level entirely.
Such a deeply personal "why" that was so much longer term than his NFL career was ever going to be. He wasn't putting the work in for the next few months, he was doing it for the next few decades. That hard work does matter and can often overcome terrible circumstances. He was working to be a part of the children's laughs and successes, as well as their tears and failures.
Use that "Why" as a Lens for Financial Decisions:
Finances aren't all that different. When we make financial decisions, some of them are very near term; where we go on a vacation, whether we buy this phone or wait for the next one. While those decisions do impact our long-term plans, we rarely think of it that way. It's easy to forget the deeply personal "why" when we are making those short-term decisions.
Every day that Smith got up to go do rehab/training, was one small step toward his longer goal. Did he keep that focus every single rep and every single day? I doubt it. But he certainly did a huge percentage of the time. That overarching goal prevented him from taking some days off, and resulted in an extra rep or two here or there. It led him to improvement beyond what he would have accomplished if he had just said, "I'd be happy to just be off of crutches." His goal may have been even loftier than what he accomplished or how fast he accomplished it, but getting 90% toward an extremely ambitious goal is WAY better than 100% of an unambitious one. Smith's "why" was to be as available as possible for his family.
Just like how Smith focused on his "why" to accomplish his short-term improvement goals, if we look at that from a financial perspective, what is our "why" to accomplish those goals?
Is tracking investment posts on Reddit forums subtracting from or adding to your "overarching why"? Are you finding enjoyment in it or is it just creating more stress? Is your path toward financial success obtainable without that extra “noise”? Because if we haven't identified our "overarching why" yet, taking big short-term risk isn't going to solve many long-term problems. Sure, it's fun to brag to our friends about how much we made on 10 shares of whatever, but it's not "simplifying" our situation.
Once we know our big "why", many of the smaller goals fall into place. Big financial goals can be very big. They can range from wanting to pay for medical school for a child or grandchild to just wanting to retire more comfortably than our broke cousin, Billy.
When we have our long-term plan in place, the small decisions such as choosing a vacation destination becomes easier. The vacation that seems more fun but costs a few hundred dollars more is easier to buy if you know everything long-term is handled. But if those few hundred dollars ARE getting in the way of some longer-term goal, then the decision is unemotional. (Or hopefully as unemotional as vacation decisions can be.)
