AS A YOUNG ENGINEER at General Electric, I took a three-day class on career development. That class strongly influenced my thinking about my career—and my life. The class made use of a great little book by David P. Campbell called If You Don’t Know Where You’re Going, You’ll Probably Wind Up Somewhere Else.
The premise of the book is that life is a journey, not a destination. We should set some basic goals that help guide our journey, but—as with all journeys—there are choices to be made along the way.
Campbell believes the foundation of a happy life is the ability to control those decisions to the maximum extent possible. If you come to a fork in the road, you want to be the one who chooses which way to go. You don’t want to be forced in one direction or, worse yet, have no good options.
How do you get to control your choices? By doing the necessary work throughout your life to gain the assets needed to make the decision. These assets are the attributes, skills, experiences, family, friends and knowledge you develop as you grow. The more assets you acquire, the more choices you’ll have.
This is also true in our financial life. The more financial assets we have, the more choices we’ll have. But we also need to acquire some non-financial assets. You probably possess many of these assets. They include innate intelligence, an ability to learn and some facility with numbers. Some of us are born into families where finance is openly discussed. That’s a terrific advantage, especially as you start your financial life.
If we lack knowledge, there’s a tremendous amount of free educational material to help us learn how to save and invest. There are great books, websites such as this one, and courses. Many of us can point to investing icons whose teachings were pivotal in our growth. Names like Munger, Buffett and Bogle are responsible for much of my knowledge.
There’s one more asset that I think is critical to acquire. I liken it to emotional intelligence. We need to develop self-awareness of how we think about money. Studying behavioral economics, and then examining ourselves through that lens, is one key to building wealth. If we’re in a committed relationship, understanding our partner is also important. Building these insights, and applying them to our life, can help us to build wealth.
I’ve studied financial planning for three decades, including reading dozens of books on investing. I helped found and run an investment club. I completed the coursework and passed the test for the Certified Financial Planner designation. I also completed the Retirement Income Certified Professional certification.
Despite all this, I’m struggling mightily with completing a retirement income plan for my wife and me. I’ve taken early retirement, and the thought of spending our hard-won retirement savings is scary. I also tend to overanalyze things, looking for the perfect solution.
Over the years, I’ve learned that when I get into “paralysis by analysis,” the best thing to do is pick a relatively easy task and finish it. In this case, I set up a recurring withdrawal from my Vanguard Group IRA, enough to cover the gap between my pension and our expenses. We’ll run this way for 2022, while I think about our next moves, such as signing up for Medicare and when to claim Social Security. It isn’t optimal, but it’s one small step on our retirement journey—and the good news is, we control where we’ll go next.
Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.