19/11/2023

Over a decade ago I had a conversation with my then girlfriend about our financial positions and where we wanted to go financially. At the time, since I already had a desire of reaching financial independence, I didn’t think too much about how that conversation would shape our future.

Fast forward to the present, I’m in my mid-thirties and we are pretty close to achieving financial independence (note 1). Given the privileged position that we are in, I’ve only now begun to realize the importance of that conversation, and many others like it. What’s made me realize this is hearing how some of my peers speak of their financial lives. Many of my peers’ careers are hitting their stride now, with many making more than enough to fund a comfortable lifestyle and save for retirement. Yet this financial capacity seems to be coupled with complaints about the rising cost of living; interest rates; how expensive children are; and how there’s little left-over to save for retirement.

For most of these people on well above average salaries, it isn’t a lack of income that’s the issue, it’s simply spending too much on lifestyle that’s the issue. It’s things like: the desire for premium class flying; the desire to own nice cars; the desire to live in a nice house in a nice neighborhood; that traps them in the rat race. This is what the marketing machine tells us that we should have if we earn good money. This is where my realization of the importance of goal setting conversations in many people’s lives comes from. I believe that for any household that generates significant earnings but does not have financial goals to align their effort and attention, the natural tendency is to spend money on what the media says will improve your life.

I can also infer that many people, have not discussed their financial goals with their significant other, which can lead to them pulling in opposite directions financially. Following on from this, I’ve begun to appreciate that one of the most important roles of a financial advisor is to open the channels for their clients to have these discussions. By guiding the discussion to help their clients clarify their goals, advisors will help to direct an important aspect of achieving goals, human effort. I used to think of advisor fees from a largely mathematical stand point which can lead to the conclusion that they reduce clients’ portfolio returns. However, after realizing the scarcity of these financial discussions within households, I have an increased appreciation for the value created by the initial and ongoing financial goal orientated discussions.

So, if you haven’t sat down and mapped out your financial goals, whether you choose to use an advisor or do-it-yourself there’s no better time to start then now.

Engineer your freedom

Note 1: Our version of FI will resemble a barista FIRE strategy where our portfolio will cover the majority of our living costs as per the 4% rule but we’ll still need to work to cover travel expenses; and cover discretionary expenses.