Have you ever had a daydream about owning a lake house where your extended family all gathers for Labor Day or where you teach your grandson how to fish? Or perhaps taking a yearlong sabbatical to travel and eat your way through Europe and Asia? Or spending the weekend touring through the Central Texas countryside in your new Porsche 911? But then thought to yourself, there’s no way I can afford to do that and pay for my kid’s college and have a comfortable retirement!
Well, I have news for you: Yes, you can afford to make your dreams come true.
There is only one catch: making big dreams come true often means accepting certain trade-offs along the way. But if you can get very specific about those things in life that are truly a priority to you and plan to make it happen, then you can make those big dreams a reality.
Identify Your Priorities
They say a person’s priorities can be seen by looking at their actions. Apparently, I spend about $500/month on gym memberships and tennis drills. To one person that may seem like too much, but to me “Tennis is LIFE,” as Ted Lasso’s Dani Rojas might say. I am comfortable with this level of spending because fitness and friendship are important priorities to me, and tennis is one way I maintain both in my life.
A good way to analyze your current priorities is by looking at your recent spending habits. Going over the last three months of spending and categorizing purchases begins to paint a picture of your spending habits. Armed with this information, ask yourself: which categories of spending align with what really brings you joy, and which do not?
Sure, setting money aside for taxes probably doesn’t spark joy but knowing you will avoid the consequences of not paying that tax bill certainly has its own psychological benefits. Along the way, you might find other areas of spending that really don’t bring you joy or utility or address a genuine need. Those are the areas of opportunity that are important to identify if you are going to achieve your financial dreams.
Align Your Spending
Perhaps you have a newly renovated kitchen at your house, but you find you are eating out 15 meals a week because you fell out of the habit of cooking. Boom! You may have just found your lake house payment. Perhaps your children are out of the house now, and you no longer need a five-bedroom house. You could right-size your home to a medium condo and pay cash. Boom! That Porsche 911 is now looking like a possibility.
Adjust Along the Way
Even the best laid plans are susceptible to unexpected events. No amount of meticulous planning will ever result in a guaranteed outcome. Technically, any plan becomes inaccurate the moment it’s implemented. That’s why it’s important to adjust along the way. Comprehensive financial plans are adaptable and can change as you or your life goals/circumstances change. There are many “levers” we can pull in our planning assumptions to make a plan viable, yes, even with that lake house.
The most common levers are increasing savings or delaying retirement a few years. Or perhaps considering doing some part-time work after retirement. A more difficult conversation might include reducing the amount of annual retirement spending required or revisiting your risk tolerance for expected investment earnings. Financial planning software allows us to model out multiple scenarios and see how combinations of adjustments impact the plan.
Find a Partner to Help
I am certainly not here to tell you that your daily $4 latte is going to ruin your retirement or hopes for a second home. There is nothing wrong with spending money on things that bring you joy – assuming those things don’t also wreck your future self. What makes one person happy is different for another, so it isn’t helpful to base your desires and priorities solely on what other people say or do. Taking time to know what you truly want out in life and setting some financial priorities is a worthwhile personal exercise for anyone at any stage.
WHWM is here to help you identify your priorities, develop a plan, and adjust along the way. Putting your trust in WHWM means working with WHWM’s Founder and President Stephen Bodwell, a CFP® professional committed helping you achieve your financial goals and big dreams. Take the next step towards getting what you want in life. Schedule your complementary, no-obligation 30-minute consultation today.
Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and subject to change.
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