The 5 Most Important Parts of a Successful Financial Strategy

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Questions answered: How important is the personal side of personal finance? How do you align your identity with your financial behavior? How can you set up your finances so that you don’t have to think about your finances?

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Key Takeaways:

Part 1: Personal finance is more personal than it is financial.
- What’s best for you?
  - Your personal goals, vision, and what you want your life to look like.
  - Will your decisions still allow you to accomplish your goals?
- Finances are important, but only to the extent that they either support or detract from the vision that you have.
- Is the financial side more important to you or is it the personal side?
- Finance should just support the personal, not vice versa.
Part 2: Momentum is far more powerful than spreadsheets.
- On a spreadsheet it’s easy to find the “right answer.”
- Momentum in a pursuit of your goal is far more powerful than whatever a spreadsheet shows.
- How can you direct momentum into the right financial behaviour?
  - Make sure it’s healthy momentum.
- The right answer financially isn’t always what makes the most sense to do. What makes the most sense to do is what is going to motivate good behaviour.
Part 3: Stocks and bonds aren’t the only thing that you can invest in.
- Compound interest is why we invest.
  - Compounding happens with our time, money, energy, and talents.
  - You don’t get to $1Million overnight. You also can’t repair relationships or master a new skill overnight either.
- The goal of a successful retirement isn’t to hit a number in your portfolio balance. It’s how you can live intentionally and do what you want to do with your time.
Part 4: Your financial behaviour is a reflection of your self-perceived identity.
- What you do now is a mirror image of the type of person you believe that you are (either consciously or subconsciously).
- Outcomes are about what you get, processes are about what you do, and identity is about what you believe.
- There are two steps to changing your beliefs:
  - Decide the type of person you want to be.
  - Prove it to yourself with small wins.
Part 5: Financial freedom is having to think about finances less.
- How can you align your finances to support the life you want to live and minimize how much you think about the money?
- How can you find what you need to do, and then automate it?
The goal of a good financial plan is to align your money with what you want your life to look like.
“Money is great servant but a bad master” – Francis Bacon