Eating My Veggies

Don Southworth, 2:55 am ET

THIRTY YEARS AGO, I took a course on sales and entrepreneurship. We had to buy a few books, subscribe to The Economist and The New York Times, and buy an HP 12C calculator. This was not your usual sales class. I felt like I was piloting the space shuttle as I learned how to use that HP calculator.

I’ll never forget the first time the instructor had us calculate how much money we’d need when we retired. I don’t remember the exact number, but it was well into seven figures. I do remember laughing out loud, thinking that number can’t be real and, if it is, we’re doomed.

The purpose of the exercise was to encourage us to take our careers, investing and saving more seriously. For some, the number was too overwhelming because they were older than me and had fewer earning years ahead. They realized they’d have to work a lot longer than planned, radically change their savings and credit-card habits, or somehow double their income. Eating dog food in retirement was also a possibility.

When I work with people new to financial planning, I do a similar exercise. Almost nobody believes the number, even when I explain the effects of compounding, time and inflation. Some decide there’s no use trying to pay off their debts or start adding to their 401(k) because they’ll never have enough. Others start to change their behavior and realize the precise destination isn’t as important as committing to the journey.

Many of us need a jolt of pain and reality to change our ways. My gambling addiction taught me that, as did saving and investing. I like to think of that HP 12C experience as a metaphor for a heart attack. The shock prompted me to start eating more financial fruits and vegetables. Thirty years later and semi-retired far earlier than I originally planned, my financial heart is in much better shape.

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Rick Connor
Rick Connor
9 months ago

Great analogy Don. The HP is an amazing tool

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