contributed by Nathan Gehring
I hesitate to write this blog post. I’ve thought about it for some time, but haven’t wanted to put these thoughts to paper. There’s a sense of bravado and horn-tooting to this. But I’ve decided to write it because I believe there are interesting thoughts to share.
Last November, I signed up for an iron distance triathlon…that is a triathlon of 140.6 miles (2.4 miles swimming, 112 miles biking, 26.2 miles running.) I knew the training would be a massive undertaking, but have discovered that it’s a far larger commitment than intended. But enough of the braggadocia.
More interest as it relates to this blog is how the commitments necessary to train for an ironman are similar to making good financial decisions. These are things I’ve discovered along the way and which I’m trying to employ in my own financial life.
Iron distance triathlon training requires tremendous sacrifice. At this point, I’m training 15-20 hours per week and trying to squeeze in that training wherever I can. It’s meant sacrificing family time. I’ve sacrificed sleep…lots and lots of sleep, with some training days beginning when the alarm clock sounds at 3:45AM. I’ve sacrificed professionally, having to back out of participating in professional organizations and discussions and writing. I’ve sacrificed lunches during the workday to squeeze in a quick run. I’m relegated to always carrying the smell of chlorine with me wherever I go. There’s a ton of sacrifice. But that sacrifice is the payment for a future benefit.
When building a financial life, similar sacrifices are being made daily. Sometimes these sacrifices are made consciously, other times without a passing thought. Bring a bag lunch to work every day or be social and eat out with coworkers? Buy the Toyota or buy the Mercedes? Take on extra investment risk for potential upside, but sacrifice sleep while worrying about those investments?
I’ve become very good at recognizing the sacrifices I make during triathlon training and choosing those consciously. I train super early in the morning to get home around the time my kids eat breakfast and to make sure my wife can get to work on time. I’ve chosen to sacrifice sleep in order to preserve (some) family time. In finances, being conscious of those sacrifices and the benefits on the opposite side of the sacrifice can help you make better financial decisions. Some sacrifice is inevitable as you pursue your goals. Making them consciously is the important part.
Accompanying those sacrifices is setting priorities. In triathlon training, I do this all the time. For now, I’ve prioritized training to complete 140.6 miles ahead of many other items. Yet triathlon is a tremendously expensive sport, but I have chosen not to prioritize being faster at my race over money. A person can buy a faster bike with faster wheels and a faster helmet. Paying a coach to help in training is almost certain to help improve the race time. This stuff gets unimaginably expensive really, really quickly. I’ve chosen instead to buy a comfortable, yet relatively inexpensive bike. It’s not the fastest bike, but it will do fine to get me to the finish line. I’ll race in my fairly generic road bike helmet, although an expensive aero helmet would certain shave minutes off my finishing time. I’m coaching myself through the process instead of paying someone to help me along. I have prioritized finishing the race over finishing the race fast at any cost.
Financial planning and financial decision making is largely a matter of prioritizing goals and expectations. The primary prioritizing question to ask in financial planning is how much living are you willing to give up today in order to prepare for living in the future? When we work through a cash flow projection or budget with clients, we’re simply reviewing how money is being prioritized. I recall a conversation many years ago with a client after they had gone through the exercise of compiling their expenses for the previous year. They were stunned by the amount they had spent at restaurants, despite enjoying preparing food themselves. They had prioritized eating out without even realizing it. And with that recognition they agreed to immediately reprioritize some spending into other areas more important to them.
There Are No Right Answers
The final item I’ve really had to accept during triathlon training is that, no matter what is sacrificed and prioritized, you still get some things wrong. Perhaps this is no surprise. Sacrifice is, after all, the act of giving something up. And that something is in many respects a loss and wrong.
Prioritizing iron distance triathlon at all might be wrong. There is plenty of anecdotal evidence to suggest that this type of endurance event isn’t actually healthy, although the training habits formed along the way almost certainly are. I may finish the race and discover it wasn’t worth the sacrifice and worth prioritizing training versus professional and other personal goals. Perhaps I’ll find it’s just not that satisfying. Maybe I won’t be able to finish at all, or finish and discover I need to do more of these races with more sacrifice or even something longer!
In finance, the same holds true. We must make decisions to sacrifice and prioritize how we chose to use our money today and balance that with what we need for tomorrow. But we don’t know that these decisions will turn out well. We don’t know that the money we choose to use today might not have actually resulted in more happiness ten years from now. Or that something we sacrifice today would have been far more beneficial than something we assume will be better in the future.
Here’s The Thing…
In my training, I’m making tons of sacrifices, some I’m sure to regret. I’m setting and following priorities, some of which are almost certain to have been the wrong priorities. I know I’m doing these things and will look back on some with a degree of sadness and regret. But the journey to 140.6 miles is making me happy. There’s something magical about being out at dawn running or biking along the beach…see above. And the sacrifices are the price to pay to get to the end of the race, to accomplish something that, had you asked me 18 months ago, I would have told you was impossible for me. And I hope the sacrifices might inspire someone else to take the first step out the door and begin running or biking or doing whatever it is that brings them closer to a more healthful lifestyle. My son and daughter have already begun racing triathlons while watching me train. The sacrifices help me potentially reach one of my life goals: to have a profound, positive impact in people’s lives.
And I think a similar sacrifice and priority decision-making rubric should be used when making financial decisions. Which sacrifices can you consciously make that still likely lead to happiness? What are the priorities that need to be set to help you arrive at your life’s goals whether those be something as nebulous as “have a profound, positive impact in people’s lives” or something as grounded as “be a great mother or father” or something basic such as “have financial security.” Are you making your financial sacrifices and setting priorities consciously, instead of allowing them to simply happen to you? Are you accepting that not everything will turn out right, and that’s ok and a part of the process? I’ve learned that doing these things consciously and forming good habits around sacrifice and priority setting goes a very long way toward reaching goals and fulfillment.