In the world of finance, leverage can either refer to (1) the use of a small portion of your own money to achieve bigger gains (with less of your own money at risk) or (2) the use of other people’s (borrowed) money for the same reasons. Either way, I kind of see it in terms of doing more with less. It’s not “getting something for nothing.” It’s about being as effective as possible.
Lately I’m paying more explicit attention to some of the more abstract, broader contexts of personal success which go beyond merely saving money and investing well, although they certainly help with that. The thing is that having a financial plan really depends on having a life plan. You need to have a bigger vision about where you’re going and what you’re doing.
Just as you don’t want to be living paycheck to paycheck, you don’t want to be living year after year without knowing why or what you should be doing.
With this in mind, I’ve been thinking about personal efficacy (life success ideas such as building a mental emergency fund), which has returned me back to the idea of maximizing your life leverage. Here are a few tips I’ve noticed that might help with getting more out of your time and efforts once you know where you want to go:
(1) Switch gears and reroute. What you’re doing isn’t working as easily as it should. Try to do something completely different or new. If you have writer’s block, close the laptop and trying writing it out by hand. You might think you know all you need to know about your finances, but take a look at a recently published book and hear things from another perspective. Learn to adapt. Let some fresh air and new light in onto your problem. This can also save you time you might otherwise have wasted on something that just won’t budge.
(2) Take a break. Maybe you’re doing exactly what you should and you’re just tired, for good reason. It’s not your fault. Acknowledge the stress and how far you’ve come. Taking a rest might also be all you need to help get you unstuck, and might even allow you to push further once you’re ready again. Besides, if you don’t rest when you really need it, you can create unnecessary problems that will just catch up with you later. It’s okay if you fall off your budget from time to time. It will remind you of why the budget is important.
(3) Let go of something. Re-examine your priorities and what you really need. Do you need to lug around that extra weight? Do you need all that stuff? Don’t buy so much. Does your mind feel cluttered? Don’t fight every battle. Have a conversation about what’s really important for achieving what you want to achieve.
(4) Talk to your future self. Imagine yourself 5 years from now (or two, if 5 seems too far ahead). Do you still owe all that debt? Are you still 40 lbs overweight? Are you still complaining about your ________ (sister, father, friend, boss, partner)? Isn’t that an awful feeling? You need to make the changes today that will help you get to be the person you want to be in the place you want to be five years from now (or one week from now, etc. etc.).
(5) Talk to your past self. This is like the above exercise in reverse, depending on how you do it. What would you want to be able to say to yourself at this point in your life, if you were your future self looking back upon this moment? Alternatively, if your current self could look back and talk to who you were five, ten years ago, would you congratulate yourself? Did you see where you got distracted, where you should have pushed harder, or slowed down, or taken more risks? We all say we wished we had started saving money and investing sooner.
There are more tips and tricks than these five that you can use for stepping over your big pile of “what the heck am I doing wrong here?” I’ll go over some more in another post. Tell me what works for you, too. Of course, much of the above only applies once you’ve already done the work of determining your purpose.
We often hear that personal finance can be “boring.” But if you’re truly bored with something, perhaps you’ve just become too comfortable, or haven’t noticed that you’re no longer in the driver’s seat. Move away from your personal equilibrium and get a bit closer to the place where you’re using some leverage to get ahead.
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{ 3 comments }
Money,
Interesting advice nice to hear something new every once in while. It’s hard always stay disciplined and “jump starts” like the items you explained are certainly a great start.
Thanks Rick, that’s exactly what I’m trying to do. Fresh perspective, take a step back, reevaluate. We need the big visions as well as the details of execution in order to move ahead. It’s easy to get caught up in the details of personal finance, so it’s important to stay on top of the bigger picture, too.
Thanks for the information and your advice.
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